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Mediation may be needed to divide student loan debt after divorce

The division of property during a divorce can become stressful. Not only must assets be split up, but any debt acquired during a marriage may also need to be divided between spouses. In general, the same principles that guide the division of assets are usually used to divide marital debt. Unlike assets, however, most spouses will be attempting to get a settlement that leaves them with as little as possible, which is why mediation is often needed during the process.

Marital debt can include things such as credit card debt, car loans, mortgages or business loans. One type of debt that can get particularly tricky during the divorce process involves student loans. If one spouse incurs student loan debt during a marriage, the other spouse may or may not be responsible for paying some of the loan back after a divorce. As the cost of higher education continues to rise, many divorcing couples may find themselves in some intense battles over a large amount of debt.

The first factor in determining whether or not an ex-spouse will have to help out with student loan debt involves how the money was used. If the money helped provide books and tuition for only one spouse, the loan is often considered to be separate debt for that spouse, rather than marital debt. However, if the loan money was used for housing or living expenses, both spouses may be on the hook.

Secondly, the degree received must be examined to determine which spouses benefited. If a spouse largely benefited from the income that the other spouse earned due to the degree received, the loan may be considered to be marital property. On the other hand, if a divorce is sought right after a degree is received, it's likely that the loan will be considered separate debt.

Lastly, the earning potential for both spouses must be examined. If it appears that one spouse will not be earning much money after a divorce, it's unlikely that he or she will end up having to help out with the ex-spouse's student loan debt.

Source: forbes.com, "During The Marriage Considered Marital Debt?" Jeff Landers, Dec. 17, 2013

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