How are Student Loans Divided in a Dallas Divorce?

Student loans can put a lot of stress on a marriage, but that stress can be amplified when divorce rolls around and those student loans are still not settled. Despite popular belief, the person who owns the student debt may not be fully responsible for paying them off once the divorce is final. While this is usually the case in instances when the debt was incurred before the union, it is not so in instances in which the loans were taken out during the course of the marriage.

At Clark Law Group, our Dallas debt allocation attorneys understand that dividing student debt can be complicated, if not a little bit frustrating. In a simple world, the debt would go to the person who directly benefited from the education—the student—and the other spouse would walk away without obligation. However, we do not live in a simple world, and oftentimes, student debt is acquired to help one or both spouses advance their careers—which is for the betterment of the family unit. This post was designed to help you better understand how and why you may be responsible for all of your own student loans or part of your future former spouse’s student loans, and what you can do to lessen your financial burden.

Factors That May Affect Your Financial Responsibility

Texas is a community property state, which basically means that all debts and assets owned by a couple are community property. This is true even of debts that were acquired before marriage. However, whether or not the judge will divide that debt equally amongst the two parties is up in the air. That will depend on several different factors, including:

  • Each spouse’s contribution to the education: If one spouse worked extra hours so the other did not have to while he or she was in school; if they paid a portion of the college expenses or the student loans; or if they contributed to the other party’s education in any substantial way, the judge may order the student spouse to reimburse the other.
  • The family unit benefited from the degree: If the student spouse earned a degree that resulted in a significant pay boost, the judge may deem both parties responsible for the loan, as their current lifestyle would not have been possible without the education.
  • One spouse co-signed the other’s student loans: Unfortunately, there is no escaping the debt for either party if both signed off on the loan. Additionally, if one spouse chooses not to pay his or her portion of the debt, the other is still wholly responsible for paying it off on time. This is important to keep in mind if the judge allocates the entirety of the debt to one spouse, as even though the court order says that the other is not financially responsible, if the court-ordered spouse chooses not to pay back the loan, it could negatively impact the non-responsible spouse’s credit.

A final thing to think about is how student loans may affect spousal support. If one spouse earns substantially more as a result of his or her education, that spouse may be ordered to pay spousal support to make up for the income difference.

Consult With a Knowledgeable Dallas Debt Allocation Attorney

Our debt allocation attorneys here at Clark Law Group understand just how complicated the division of property aspect of divorce can be. However, because we have extensive experience in negotiating settlements, we often help our clients make it through the process relatively unscathed in the financial sense. If you or your spouse has significant student loans and you want to know more about how you can walk away with as little student debt in your name as possible, reach out to our team for help. Call (469) 906-2266 to schedule your free consultation today.

(image courtesy of Faustin Tuyambaze)

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