How to Know If Student Debt Is Marital Property

Tennessee, like most of the country, is an equitable distribution state. This means that, if a couple is unable to agree on a division of marital property, a judge will split the property in a way that he or she deems fair; this does not always mean that assets are split 50-50. Not only does a judge determine the division of assets, but the judge also decides how to split the couple’s marital debt equitably. To get a sense of how much money a person may walk away from a divorce, the first step is determining which assets and debt are marital versus separate.

Typically, assets acquired or debt incurred prior to marriage will be separate unless the person took some action to make it marital property during the marriage. For instance, if one person has a house prior to getting married, but the spouses both live in the house and pay for the house during their marriage, then the house would be a marital asset. It is more cut and dry when it comes to student debt, which is almost always separate debt if it was acquired before marriage.

One exception to this would be if both spouses held student debt and consolidated their loans into one. For federal loans, this was only possible up through 2006. Even if a person incurs student debt during a marriage, that person will typically be solely responsible for the loan after a divorce if the loan is only held in his or her name.

If a person’s spouse co-signed a student loan, both must repay the debt. In this case, when a couple holds any debt or assets jointly, it could be a good idea to work with a family law attorney to see if a settlement is possible, without relying on a judge to determine a “fair” split.

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