Going through a divorce can be a tough and stressful process, especially when it comes to dividing the debts and assets. Among the list of various debts one can have, student loan debt can be a major concern for couples who acquired it during the course of the marriage.
Divorce is often a complicated situation, and the division of student loan debt can make it even more complex. If you are facing a divorce in Texas and wondering how student loan debt is divided, then read this blog for a better understanding.
Separate Property vs. Community Property
Before diving deep into this topic, it's crucial to understand the difference between separate and community property. In Texas, property acquired during a marriage is considered community property, and debts and assets are divided accordingly. However, student loans acquired before marriage are considered separate property.
If the student loan was taken during the marriage period and before the divorce petition was filed, then it may be categorized as community property. Student debt assumed by either party before marriage may be considered as that individual’s separate property. Therefore, in Texas, student loan debts can be treated differently, depending on when they were acquired relative to the beginning of marriage.
Who Is Responsible for the Student Loan?
Another crucial factor is the nature of the student loan debt. If the student loan was taken solely in one spouse's name, then that spouse is solely responsible for paying it off. In such a case, it is considered a separate debt, and the other spouse is not liable to repay it.
However, if the loan was taken out in both spouses’ names, then it is considered community property. In Texas, the community property is divided equitably between the parties, which means it’s not necessarily a 50/50 split but rather a fair division.
What Happens When Student Loan Debt Outweighs Assets?
It's also essential to determine if the liabilities of student loan debt outweigh the value of assets. It may lead to adjustments in the debt division.
If the court finds that the loan debt is disproportionate and overly burdensome, it may order one spouse to take on more debt than the other to make an equal division of assets. This is commonly known as disproportionate economic consequences, and it helps the court establish a fair division.
The Type of Student Loan Also Matters
The division of student loan debts also depends on the type of loan taken. In Texas, loans are classified as secured or unsecured loans. If the student loan is a secured loan, it means the debt is tied to a physical asset, such as a house or a car. In such a case, the debt is divided based on how that asset is divided in the divorce settlement.
On the other hand, unsecured loans aren’t secured to any other asset, which makes their division more complicated. In such a scenario, the debt is apportioned in a more equitable manner to avoid overburdening one spouse.
Do You Need Help with Your Divorce?
The division of student loan debt in a divorce can be crucial in determining a fair settlement for both parties. If you're facing a divorce and student loan debt is a concern, it's important to consult a divorce attorney who can help you understand the legalities of the division.
It's essential to keep in mind the type, nature, and timing of debt and assets to make an equitable division. Hopefully, this blog will give you a better understanding of how student loan debt is divided during a divorce in Texas.
If you require legal assistance from an experienced divorce attorney, contact Kay Polk, Attorney at Law.
