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Michigan Family Law Blog

Saturday, August 15, 2020

How Are Student Loans Handled in a Divorce in Michigan?

There are many issues that people face when it comes to divorce or separation including custody, parenting time and alimony but almost every case involves the division of property and debt. Student loans are handled as part of the property division that must take place in almost every divorce.

How Does a Court Divide Debt Between Parties?

The law regarding division of debt is very similar to the law regarding division of property.  When it comes to dividing debt, most debt, regardless of which party accumulated that debt will be considered marital debt.  Marital debt is divided in a roughly equal manner between the parties.  The definition of "marital debt" is very broad and typically includes even what the other spouse can often see as serious over spending.

There are some debts that one may incur during the marriage that are not considered marital.  Those things include spending money on an affair with another person or any gifts or money spent on that person.  Serious gambling debts and sometimes very significant losses incurred by alcohol or drugs can also fall outside of the realm of marital debt, however most unsecured debts are going to be considered marital and subject to roughly equal division.

Secured debts are treated slightly differently.  Secured debts are debts like mortgages or car loans.  Typically, those types of debts are counted against the value of the property that it is secured against.  So for instance, the house is sold and after the proceeds are paid off, then the parties split the proceeds, or a car is awarded to one party and that party will remain responsible for the loan associated with the car and the value of  the car will be discounted by that loan balance. 

 Finally some debts are just handled in a different manner altogether.  Student loans fall into that category.  Student loans typically remain the responsibility of the person that incurred that loan without any offset against other property.  The logic behind this is that the person who received the education and/or degree will take the benefit of it with her or him and therefore should remain responsible for the loan.  If the loan was used in part for other things, like living expenses, then that portion should be divided equally but the person making this claim must have documentation to support or prove this claim.

Oakland County Divorce Lawyers are Here to Help

Student loans and the division of debt between the parties is only one of the many issues that parties face in a divorce that may not seem complicated, but the divorce court may handle it in a far different manner than one might expect.  No matter what your circumstances are, if you or your spouse are considering filing for divorce you should seek legal advice as soon as possible. Contact our Michigan divorce lawyers today to speak with an attorney who will guide you through this challenging time.


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