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Handling Student Loans In a Divorce Proceeding

On Behalf of | Jun 26, 2014 | Firm News

Everyone knows that the price of a college education has skyrocketed in the past few years. In fact, the cost of an undergraduate or a professional degree can be even greater than the mortgage on a house. When couples get married, often times they carry that student loan debt with them. But— what happens when the marriage is severed? This has become a major issue in divorce cases in California.

During a dissolution, it is important to know your rights and your obligations with regard to student loan debts. Under Family Code 2641(b), when student loans have been paid from community assets, the community may be entitled to reimbursement for those payments. The court will look at a number of factors to determine whether reimbursement is warranted. For instance, the court will consider whether the student loan actually helped to increase the earning capacity of the debtor spouse or, alternatively, whether the community benefited from the spouse’s degree.

If there is still a balance owed on the student loan at the time of dissolution, the balance is not divided between the parties, but is ordinarily assigned to the spouse who incurred the debt.

In the event of a divorce, it is very important to speak to a knowledgeable attorney regarding student loans.