Student Loans and Divorce: Yours, Mine or Ours? | | JD Supra

What debts are considered marriages?

According to divorce law, all debts acquired between the date of marriage and the date of separation are considered “marital” debts, regardless of their title.

How are marital debts handled?

In Pennsylvania, unless the parties agree to divide the debt, it is up to the court to decide what allocation is fair under the circumstances of the case. Fairness does not necessarily mean equal division and depends on various factors set out in divorce law.

What about student loans?

In Pennsylvania, the distribution of education loans in a divorce case is a little more complicated than the distribution of other types of marital debt. Clark vs Clark, 586 MDA 2021 (February 1, 2022) reiterated in a recent undisclosed case by a superior court that student loans are treated differently than other debts borrowed during marriage.the court of Clerk Student loans accumulated during a marriage are by definition considered “marital debts,” but with respect to the division of these debts, additional pennsylvania courts must apply to the question of equitable distribution. Note that there is an analytical layer. This is perceived as an investment in which this particular type of debt often benefits only the borrower and greatly increases that party’s future earnings potential. because

This treatment of student loans used to be mandy vs mandy151 A.3d 230 (Pa. Super. 2016) and Hicks vs Qubit, 758 A.2d 202 (Pa. Super. 2000), The High Court held that all debts incurred during a marriage are normally marital debts, but by definition are subject to the possibility of the borrowing spouse’s income. It was certified as an educational loan invested to enhance sexuality. It must be properly assigned to the borrower. Since the borrower is the person who primarily benefits from increased earning capacity through improved education, the individual is usually responsible for the debt.

In a divorce, therefore, the court is tasked with distinguishing between the portion of the loan that was spent on the parties’ education and the surplus used for joint expenses. In making this determination, courts often ask whether the loan was paid directly to the school, used for books or supplies, whether the funds were put into a joint account, used for household expenses, or for childcare expenses. I’m trying to find out if it’s been used. After this analysis, the court will allocate the liability accordingly. Responsibility for debts spent solely on education is assigned to the borrower, and the remainder spent on joint costs is split equitably by both parties.

It is important to note that if parties co-sign a loan taken during the marriage, the co-signing party remains responsible for the loan until it is released by the lender. Additional steps must be taken by both parties to remove the non-married spouse from obligations. A divorce of the parties does not automatically result in the removal of the co-signing spouse. For student loans taken out before marriage, the refinancing parties are individually responsible to the lender of the loan unless refinanced in both spouses’ names during the marriage.

Important points:

Pennsylvania courts have given a specific analysis of the division of education loans in divorce cases, so student loans are treated differently than other marital debt. Whether the debt is divided between the parties depends on whether the funds were used solely for education or were spent on joint expenses during the marriage.

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