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Who Is Stuck With Student Loan Debt After Divorce In Orlando?

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Divorce is not easy, but it can be especially painful when the parties negotiate who is responsible for what debt, and why. Student loan debt cannot be discharged in bankruptcy, and federal loans can only be refinanced once. When both parties take on debt during the marriage, it can be difficult to decipher who is on the hook for making payments after a divorce is finalized. How do Florida courts divide joint marital debt?

Dividing Joint Marital Debt

Florida law requires parties to take a full accounting of their debts, liabilities, assets and property in order to equitably distribute joint property and joint debt. Florida courts will examine the source of the debt and when it was acquired to determine if it is joint marital debt or not. Fla. Stat. § 61.075 (2018). If a debt account was opened prior to the marriage, the court views that debt as the responsibility of the sole debtor/party. However, a car loan or security obligation for which the couple co-signed is a good example of joint debt. Things can get muddled if one party made payments on behalf of the other party despite not being a co-signer. Or one party could argue that they did not agree to take on additional debt, refinance, etc., but the other party did so anyway with joint marital funds or collateral for a loan.

Resolving a Student Loan Debt Dispute

Student loan debt is difficult to simply divide when two parties get divorced. Usually, student loan debt is taken on well before the parties were married, meaning it is not necessarily joint debt. In addition, despite when the debt obligation was taken out, the IRS and the U.S. Department of Education makes financial aid awards for married couples based on joint income. Loan servicers also view a married couple’s joint income and assets when considering a borrower’s eligibility to refinance or choose another repayment option. If both parties were students and have student loan debt, it can be difficult to determine how to divide the debt “evenly”, especially if one party has an advanced degree. However, even if debt was acquired after the marriage occurred it is joint debt. In addition, sometimes courts will consider the obtainment of further education a contribution to the marriage that both parties benefited from if it increased standard of living or income while the parties were married.

After a divorce, you need to inform your private or federal loan servicer if there has been a name change, in addition to your marital status. This will also have tax implications you will want to consider before making a decision. Divorce should not leave you unable to pay your bills, but is possible to request a temporary deferment of payments if you contact a loan servicer well in advance. You may also qualify for an income-based repayment program due to special circumstances (the divorce).

Call Orlando Divorce Attorney Steve Marsee Today

If you or someone you know is struggling with debt division and going through a divorce, you will benefit from the assistance of an experienced divorce lawyer. Orlando family attorney Marsee can help you identify the options that are right for you. Call our office today to schedule a consultation.

Resource:

flsenate.gov/Laws/Statutes/2018/61.075

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