Dividing student loans in a divorce

Many people apply for and take out student loans to pay for their undergraduate, graduate or professional degrees. 

In general, the student assumes financial responsibility for these loans. However, in some situations, a married couple may share responsibility for one spouse’s student loans. When the couple gets divorced, the spouses must determine how to assign or share this debt. 

Single or joint student loan debt liability factors

Student Loan Hero explains that multiple factors may contribute to both spouses sharing liability for one spouse’s student loan debt. A loan taken out by one spouse after the couple’s date of marriage may well fund the couple’s rent or mortgage payments while one person attends school. This may increase the chance that the couple must share responsibility for the debt during a divorce. 

Degrees as joint assets

According to U.S. News and World Report, a judge may deem a degree a joint asset. This would contribute to the need for both spouses to share the debt during and after their divorce. 

Ability to repay student loan debt

A spouse with limited earning power may not need to repay a partner’s student loan debt in part due to inability to afford the loan payments. 

Timing of loans relative to marriage

A person who took out a loan to pay for an undergraduate degree and then got married 10 years later would likely need to repay the undergraduate student loan debt on his or her own. Conversely, a person who took out a loan to pay for a professional degree many years after getting married may share that debt with a spouse. 

Should you give up your house after the divorce?

The stay-at-home parent traditionally keeps the home and continues to raise the children after a divorce. However, this is rapidly changing. Changes to social norms and court treatment of alimony may prompt you to question whether you should keep the home or allow your spouse to? Would selling it serve your interests better?

Parents often feel more comfortable keeping the home to ease the transition process for children. However, children generally feel more concerned about the relationship with parents than the home they reside in.

What are the options?

When it comes to whether to sell or keep the home, you have four main options to consider. According to NerdWallet, the first involves selling the home and splitting the profit as marital proceeds. Another option involves refinancing the mortgage so that you or your spouse keeps the home independently.

If the spouse who wants the home cannot qualify for a mortgage, a third option involves the breadwinner paying the mortgage. Finally, you may keep the house and share the expense for the sake of the children. In this arrangement, you generally sell the home once the children leave the nest.

What are the pros and cons of keeping the house?

The main pro of keeping the home is reducing how many changes you need to make after a divorce. You may also find it easier to ensure the children remain in the same school district. Keeping the home may also help one spouse to hold on to more cash or other assets in the divorce process.

Unfortunately, keeping the home may create friction between exes, especially when conflicts arise over utilities and upkeep. It may also cost more in comparison to downsizing to an apartment or a smaller home.

No one-size-fits-all answer exists for whether to keep the house. However, most finance gurus seem to recommend downsizing after a divorce, even if you have children.

Unsure about collaborative divorce? 3 tips to help you prepare

If you are second-guessing the choice to take your divorce to court, you are far from alone. Traditional divorce through the court system often leads to uncertain judicial outcomes, extraordinary expenses, adversarial “solutions” and entrenched animosity. 

Collaborative divorce is different. In addition to minimizing the emotional strain and costs of litigation, the collaborative process aims to help separating couples craft a plan for the future that makes both emotional and financial sense. 

However, collaboration is not for everyone. For the process to be successful, each spouse must agree to work toward solving present and future problems rather than settling past scores. 

1. Keep things civil

Staying on truly friendly terms with your spouse may be unrealistic. However, at least maintaining civility, both in person and on social media, is essential for the collaborative process. That is especially true if you have children, who may pick up and internalize even the subtlest cues about conflict. 

2. Prepare for disagreements

Even during collaborative divorce, disagreements are often inevitable. When preparing for a collaborative session, know that you are likely to hear things you do not agree with. 

Know, too, that you can determine your own decisions on your own schedule, and with the advice of counsel. Often, a little patience in hearing the other side out can go a long way toward resolving disputes more amicably. 

3. Focus on the future

The pain of present conflict can make it difficult to assess priorities. While separation is an end in one sense, there is also an entire future in front of you. Whether you have worries about finances, your relationship with your children or division of properties/businesses, a collaborative approach to divorce may help you to better assess both the emotional and financial consequences of separation. 

Divorcing someone with permanent health issues

Divorce can be difficult under any circumstances, but permanent health issues can complicate matters. If your marriage is ending and your spouse has serious chronic medical problems, you may wonder how to proceed. 

You have options. You may consider a long separation rather than divorce, though that can come with a great deal of uncertainty. You may prefer to go through with a collaborative divorce. In such a divorce, you and your spouse have control over the final outcome and can address health issues. Your spouse’s ailment can affect several aspects of your settlement and your post-divorce life. 

Parenting time 

Your spouse’s ailment can be a factor in parenting time decisions. Some conditions may make your spouse unable to care for your children. For example, a cancer patient may be too weak and miserable to care for children during the week following chemotherapy. In that case, you might care for the children after each session. Remaining flexible is crucial in these situations. 

Health insurance

In Florida, you may not extend your health coverage to your spouse once the divorce is final. A new insurance policy may not cover your spouse’s preexisting condition. If your spouse is able to attain health insurance, the policy is likely to be costly. 

Alimony

Courts use several factors to make an alimony determination. One consideration is the mental and physical health of each party. Another is the earning potential of you and your spouse. Your spouse’s chronic health condition may prevent full-time employment. 

Collaborative divorce allows you and your spouse to address the issues surrounding permanent ailments. Working together, you can achieve a settlement that benefits you, your spouse and your children.