Student loans are in the news right now as the Biden Administration is considering the issuance of an executive order. This would eliminate up to $10,000 of federally insured student loans for individuals. Currently, there is a wide range of opinions about this. Some are clamoring for more relief, while others are dead-set against the idea of relieving student loans. The importance of student loans in the lives of many Americans will remain unchanged. This is regardless of whether executive orders ultimately relieve student loan debt.
Student loans may have become a part of your life as a young adult who went to a college or university immediately after high school. Or, you may have entered school as an adult and have only recently incurred these debts. If you and your spouse are unprepared to handle the subject, student loan debt can significantly impact divorces in Texas. Take control of your student loan situation by understanding how Texas divorce cases address student loans.
If either you or your spouse has student loans, they become a relevant subject in the event of divorce. With the substantial number of student loans held by many, this can significantly impact your divorce proceedings. Repaying student loans is a widespread reality, potentially complicating an otherwise straightforward divorce. Understanding how Texas divorce cases address student loans can help you evaluate the potential risk of contributing to your spouse’s student loan debt during the divorce.
How does community property law impact the division of student loans in a Texas divorce?
Texas is a state that bases its laws on property division in Texas upon community property principles. Before we can begin a discussion on dividing student loans and why your spouse’s loans may end up being your responsibility in a divorce, we should spend some time walking through the basics of community property laws in Texas. That way you will have a solid base to work from when it comes to learning how to manage your expectations surrounding student loans and community property.
In a divorce case, a family court judge can divide community property. It is presumed that all property owned by you and your spouse is community-owned at the time of your divorce. You can overcome this presumption by presenting evidence that a certain piece of property is separate property. Your spouse can do the same. Separate property is property owned by either of you before your marriage or acquired during your marriage either by gift or inheritance.
Dividing Debts in Texas Divorce Proceedings
In a Texas divorce, debts operate similarly to property. Community debt and separate property debt exist, with the assumption being that community debt will be divided equally between spouses. However, equitable distribution doesn’t always mean equal; it’s about a fair and just division. Understanding this is crucial, especially when considering how student loans will be handled. Fairness is paramount to family court judges in property division.
If you incurred student loans before your marriage, they will remain your separate property. Any debt in your name will be your responsibility, while debts in your spouse’s name will remain theirs. However, student loan debt accrued during your marriage will be presumed as community debt. It is subject to division in the divorce proceedings.
This does not mean, however, that the debt will be divided directly down the middle between you and your spouse. Rather, a family court judge would apply principles of Community property. They will divide the property in an adjusted and right manner. Remember that fairness plays a big role in this discussion period. This means that it would not necessarily be fair for you two to wind up having to pay for a large portion of your spouse’s student loan debt period. owever, there are always circumstances in a person’s life that could cause some disruption to this general principle.
Navigating Student Loan Division in Texas Divorce
Based on the information covered in today’s blog post, dividing your student loans can be a relatively simple process. You and your spouse determine the timing of property or debt acquisition and make decisions accordingly. However, it’s important to note that Community property law can quickly become complicated. As a result, you should prepare to learn as much as you can about factors that may complicate the division of student loans. These factors could work for and against you depending upon your marriage and the nature of the debt.
For instance, do you and your spouse have a prenuptial or marital property agreement in place? If so, then you may have already contracted for what would happen in the event of a divorce about your student loan debt. The beauty of marital property or pre-marital property agreement is that you can contract for whatever you want even if it does not necessarily coincide with the practices of a family court upholding community law principles. You all can take into consideration whatever you want when dividing up student and debt in a premarital or marital property agreement. If the agreement aligns with Texas public policy principles, a family court judge would be bound to uphold it.
Refinancing Student Loans in Texas Divorce
Another interesting factor to consider is what would happen if you are you finance your student loan. Refinancing alone takes that student loan and blends it into another loan or creates a brand-new loan. At that point, separate properties student loans may have become part of a community property debt or combinations of debt. When we talk about an issue like this it is similar to Co-mingling of separate and Community property assets. Considering refinancing your student loan debt while still married could result in the transformation of what was once separate property into part of your community estate. While you may not be able to address this directly during your divorce, it’s an important factor to consider.
Arguments can be made that if a student loan taken out during the marriage benefited the marriage, the debt should be considered community property rather than separate debt. I can imagine a scenario where your spouse took out student loans and order to become a doctor before your marriage. Since your community income increases a great deal due to their work as a doctor then your spouse could conceivably try to make an argument that because they are taking out a student loan was so advantageous for you that the loan should rightfully be part of the community estate. I don’t know how successful this type of argument would be, but it could conceivably be one that you’re spouse attempts to make.
Impact of Large Student Loan Debt on Divorce Obligations
Significant student loan debt can affect various aspects of your case. For instance, if the court orders you to make substantial contributions to your spouse’s student loan payments, you might struggle to afford spousal support, maintenance, or fulfill child support obligations. This is not out of the realm of possibilities especially if your student loan obligations reflect college and Graduate School.
Considering these circumstances, it becomes crucial to safeguard your interests. Being compelled to repay loans that weren’t yours and didn’t significantly benefit you or your household is a different matter from simply having student loans. Earlier, I mentioned an example where medical school student loans may have substantially improved your quality of life, even if you’re not a doctor. However, if your spouse took out student loans and either didn’t finish their degree or earned a degree that didn’t result in a substantial income, then this argument wouldn’t seem all that convincing.
As a result, if you are concerned with the amount of debt that your spouse has in student loans and want to make sure that you do not end up with those deaths on your side of the Ledger after divorce then working with one of the experienced family law attorneys with the Law Office of Bryan Fagan would seem to be a sensible plan for you. Our attorneys are adept at defending you in situations where your spouse may attempt to transfer some of their student loan obligations onto you during a divorce case.
Protecting Your Finances in Divorce: Why Legal Guidance Matters
While I am sure that you have no problem paying your share of household bills and other debts that you have accumulated in your name the last thing you will want to do is pay debts that are not in your name and did not stand to benefit you or your children. This is an intimidating prospect for anyone who has gone through or is currently going through a divorce case. Rather than worry excessively about what this type of situation could mean for you and your family your best bet is to work with an attorney who has helped defend people in these types of situations before.
There is a huge difference between an experienced family law attorney and one who practices family law only sporadically. Our attorneys and staff can advocate for you in the courtroom and negotiate skillfully on your behalf outside of court. Additionally, our attorneys stay up to date on current case law and changes in state law regarding Community property division. We value the ability to work with clients and potential clients just like you. It is an honor to serve our community in this way and we appreciate the confidence of our many clients located across the state of Texas and around the world.
How mediation figures into the division of deaths and property
Fortunately, you have options to consider when it comes to Community property division and your divorce. We have already talked about how a premarital or marital property agreement may be able to help give you Peace of Mind when it comes to being able to work through issues regarding division of property and debts. By working closely with your spouse before divorce, you both ensure that you can enjoy the benefits of your marriage without worrying about how property will be divided in the future.
Dividing debt can be just as complicated emotionally as it is financially. This is especially true if your spouse is angry about the nature of the debt and otherwise not satisfied with the degree she earned, experiences after college, or income earning potential because of having earned the degree. it may be that your spouse has a number one goal of getting out from under these student loans and sees this divorce as her best opportunity to do so. Be aware that her motivation in this regard may be more substantial than their desire they can’t push anything else in the case.
Open Communication: Understanding Your Spouse’s Divorce Goals
It does not need to be a shock to you to learn about your spouse’s goals regarding the divorce. Simply put, you can speak to her and her attorney about goals and objectives throughout the case. You may be surprised to learn that she is upfront and honest with you about what she wants to accomplish with the case. This way, you can understand her approach on certain subjects and can better prepare your settlement offers when preparing your case for a hearing or mediation.
Otherwise, mediation presents a circumstance where you and your spouse can lay your cards on the table and negotiate earnestly with one another to address the major issues of your case including student loan payments. Student loan payments fall under the general heading of Community property and debt division. You all can consider the property that you own and the debt that you have as being necessary or division in your case. This means that issues such as your health, resources, separate property, age, and income earning potential are all relevant factors for a court to consider when dividing property.
Strategic Negotiation: Considering Key Factors in Divorce Settlements
Although you and your spouse do not have to explicitly consider these factors in your negotiation, it would be wise to do so. This is since you know that a family court judge will use these factors. You should be considering them as well while you are negotiating. For example, if you are someone who earns a great deal of money, is young and healthy, but has a spouse who has a significant amount of student loan debt then it may be in your best interest to make an offer to pay for a portion of that in exchange for keeping more retirement income in your name or avoiding having to take on greater amounts of student loan debt.
Again, however, it is completely up to you how you want to approach this topic. Everyone reading this blog post has different circumstances on their hands in terms of how to prepare for the negotiation process surrounding Community property, debts, and student loans specifically. Another factor to consider is what you will need to do to confirm the amounts of debt that you may owe. Reviewing your credit report to ensure that all debts are accounted for in the divorce process is advisable. The last thing you want to do is find out that you have certain debts to your name after a divorce is already over with that you were previously unaware of.
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Other Articles you may be interested in:
- Final thoughts on Bankruptcy and a transition into discussing the sale of your home in a divorce
- Where Bankruptcy and Family Law Collide in Texas
- Bankruptcy and Divorce
- Is a Wife Responsible For Her Deceased Husband’s Credit Card Debt?
- What Happens To Debt in Texas Probate?
- What Happens to Your Debt When You Pass Away in Texas?
- First comes divorce and then comes bankruptcy: What to expect when one follows the other
- Dividing Your Property and Debt in a Divorce
- Military Divorce and division of marital property and debt
- How are assets and debts divided in Divorce?
- How to untangle your debts during divorce
- How is credit card debt handled in a Texas divorce?
- Know How Property and Debts are Divided, When Preparing for Your Texas Divorce
- What Happens to Marital Debt During a Texas Divorce?
Frequently Asked Questions
Am I responsible for my spouse’s student loan debt in Texas?
Do student loans show up on your and your spouse’s credit?
Can I take over my wife’s student loans?
Does my husband’s debt become mine?
Bryan Fagan, a native of Atascocita, Texas, is a dedicated family law attorney inspired by John Grisham’s “The Pelican Brief.” He is the first lawyer in his family, which includes two adopted brothers. Bryan’s commitment to family is personal and professional; he cared for his grandmother with Alzheimer’s while completing his degree and attended the South Texas College of Law at night.
Married with three children, Bryan’s personal experiences enrich his understanding of family dynamics, which is central to his legal practice. He specializes in family law, offering innovative and efficient legal services. A certified member of the College of the State Bar of Texas, Bryan is part of an elite group of legal professionals committed to ongoing education and high-level expertise.
His legal practice covers divorce, custody disputes, property disputes, adoption, paternity, and mediation. Bryan is also experienced in drafting marital property agreements. He leads a team dedicated to complex family law cases and protecting families from false CPS allegations.
Based in Houston, Bryan is active in the Houston Family Law Sector of the Houston Bar Association and various family law groups in Texas. His deep understanding of family values and his professional dedication make him a compassionate advocate for families navigating Texas family law.
