Many of those in California considering divorce arrive at their attorney’s office prepared to discuss a strategy for division of property. They often overlook liability for debts incurred by their spouses. Liability can be determined by many factors, including the state where the couple resides, the type of debt and who benefited from taking on the debt. Student loans are often a significant household debt.
California is a community property state, so whether one spouse is liable for paying the student loans of the other spouse may depend on whether the debt was incurred before the marriage began. In community property states, debts are treated the same as assets: They are divided in half. However, a degree earned by one spouse during a marriage is considered the property of that spouse. The spouse who earned the degree is not required to share increased earnings brought about by the degree as part of asset division. It also usually means that the spouse who incurred the debt for the education is liable for that debt.
If student loans were used to help pay living expenses while one spouse took classes, then the debt may be equally divided since both spouses benefited from the debt. Questions as to whether one spouse took on debt with the hope of increasing earning potential in order to be able to support the other spouse may have to be settled through rulings on spousal support rather than rulings on division of property.
Those considering divorce may want to discuss division of liabilities when they talk to an attorney about marital property and complex property division. Such a discussion can help a person have a clearer idea of what to do before and after the divorce.
Source: Forbes, “Are Student Loans Incurred During The Marriage Considered Marital Debt?“, Jeff Landers, December 17, 2013