When couples in Minnesota go through major life events, they often look at their finances before doing anything. This is not only true for planning nuptials or a family, but also when a married couple decides to call it quits. Dissolution could cause many divorce and financial issues to surface. This is especially true if the couple has assets and liabilities that complicate the process. Property division is an important and challenging step in a divorce and it could lead to disputes and further obstacles if the divorcing couple is not able to come to terms with each other.
When young couples get married, they should not only consider what property and assets they are bringing into a marriage but also the liabilities as well. It is very common for both spouses to have student loan debt these days, and having tens of thousands of dollars in student loans could mean having a debt that could easily outlast a marriage. This could cause a great deal of complication when a couple decides to divorce.
There is a misconception that student debt is automatically treated like marital assets and is divided equally in a divorce. The truth is that student loans are often treated like separate property and will remain with the individual who obtained that debt prior to marriage. Although this is a frequent result, the situation could be complicated if the divorcing couple is fighting for equitable distribution and spousal support.
If one spouse has a high income and the other spouse is struggling to make payments, the other spouse might be required to provide spousal support in the divorce to help make these payments. This is especially true if that spouse helped make their student loan payments during the marriage.
Financial situations can greatly impact the divorce process. It could lead to numerous disputes while marital property is being distributed. Those struggling to come to terms or reach an agreement should understand their rights and options.
Source: The Wall Street Journal, "Who Is Responsible for the Student Loans After Divorce?" Charlie Wells, April 13, 2014