Submitted by Rachel R on Fri, 07/27/2018 - 9:57am
Student loans and divorce
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Excessive debt isn’t something anyone wants to deal with – and isn’t an attractive quality to most people. It’s also a known fact that financial stress leads to marital trouble and is a significant driver of divorce. But how do student loans impact marriage and divorce? It’s a complicated issue and one that deserves a closer look.
Over the same period that student loans have skyrocketed, rates of marriage declined while couples increasingly (and exponentially) chose cohabitation over wedlock. Between 1990-2010, rates of living together went up by almost 140%. In addition to fewer marriages, people are marrying later. Women once married by age 23 and men by 26. Now, it’s 27 for women and 29 for men, and many correlate this with increasing college debt.
Student Loan Hero examined student loans and divorce and found that roughly 13% of student loan debtors said their college debt “led to the end of their marriage.” A factor complicating divorce is that it’s costly and those already struggling to pay bills usually can’t afford lawyer bills on top of their debt. Student Loan Hero found that 35% of student loan debtors delayed their divorce because it was too costly. Plus, nearly 60% of student loan debtors took on debt to pay for their divorce.
The average amount of student loan debt per graduate is now tipping $39k. The cost of a divorce? Those run from $12k-19k depending on whether there are children and custody involved. The same Student Loan Hero study found that the average person surveyed spent almost $19,000 on their divorce. Of greater interest is that student loan debtors that divorce spent $2k more, on average, making their split official than those without student loans.
In community property states, (which North Carolina is not), if you marry someone with student loans, the debt essentially becomes yours. Although that’s not the case in NC, if your spouse takes on student loans while you’re married, they might be able to wrangle a court settlement to stick you with part of the debt.
For instance, if you married and then they borrowed to finish their degree, their lawyer could make the case that you benefited from the debt and should have to help pay for it. You might not have to pay directly to their loan servicer, but the argument, if successful, could result in higher alimony payments or losing some equity in an asset like your home.
Financial stress can stress your marriage to the breaking point. If you’re struggling with debt and considering divorce, you may come out better on the other side if you file bankruptcy as a couple, clear up your debt mess, and then proceed with your divorce. There’s also the possibility that once you alleviate the messy money matters, your marriage might be salvageable.
Even if scrapping your debt can’t save your marriage, it can make your split much more amicable. When debt follows you after your marriage breaks up, it can make a clean break impossible. Fights over finances won’t end when you move apart and, in fact, can intensify and wreck any chance at an emotional and financial fresh start.
Many attorneys recommend filing bankruptcy as a couple (depending on your debt load, the mix of debt, and whether debts are in both your names) before you make the split official. Once you shed the debt, you can look at your relationship with fresh eyes. You can reconcile or split, but with an emotional and financial clean slate. That’s a win-win.
Struggling with student loans? Depending on your circumstances, you might win a discharge of this debt in bankruptcy. Read reviews from our clients then contact the Law Offices of John T. Orcutt for a free student loan bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington. Call +1-919-646-2654 now.
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