Student loan debt takes such a big toll on marriage that it can even lead to divorce. Financial problems are the leading cause of stress in a relationship, and student loan debt, which now stands at an all-time high of $1.5 trillion, can be a burden that becomes too much to bear. The debt puts tremendous pressure on young couples who are struggling to get established in their careers and wish to buy a home or start a family.
The average outstanding balance for student loans is now $34,144, up 62 percent over the last decade, according to a report by Experian. And according to a recent report from the website Student Loan Hero, more than a third of borrowers said college loans and other money factors contributed to their divorce, and 13 percent of divorcees blame student loans specifically for ending their relationship.
The skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to even the most well-intentioned people. We offer a free consultation to evaluate your financial situation. We can help by looking at your income, your student loans and other debts, and your goals and coming up with a plan that’s best for you and may even save your relationship.
How is debt divided in Ohio?
Student loans not only contribute to divorce, they can make the process of dividing assets and debts more complicated. Who owns the debt from the loan when couples split, and how is it going to be paid off in the future?
Ohio is an equitable distribution state, which means marital property and debts may not be divided equally. Instead, a judge will divide them in what is considered to be a fair and just manner after evaluating the individual circumstances. The courts look at whether a couple’s property and debts are considered marital or whether they belong to one spouse separately.
Student loan debt may have occurred prior to the marriage, or it may have occurred during the marriage. Since the benefit of that debt, the person’s education, belongs to the individual and can’t ever be taken away, usually the debt is considered separate debt. However, if the money for education was borrowed during the marriage, the situation becomes more complicated.
Debts taken on during the marriage are generally considered part of the marital estate and may be divided in various ways, depending on whether one or both spouses benefited from the loan. Factors that may be used to determine whether the student loan debt is a part of the marital estate include:
- When the debt was incurred.
- How the money was used and who benefited from it, if a degree was obtained.
- Tax implications related to the debt.
- The duration of the marriage.
- The contribution of a spouse as a homemaker.
- The value of the assets of each spouse and their relevant economic circumstances.
- The age, health, occupation, skills, employability, earning power and needs of each spouse.
In some circumstances, a divorcing spouse who has to pay off student loan debts might be compensated by means such as temporary spousal support. There may also be compensation for a spouse who kept the home while the other spouse earned a degree. In cases where one party has helped the other pay off separate student debt prior to and during marriage, it may be considered a gift by the court.
Student Loan Debt and Bankruptcy
High student loan payments have become a large part of the financial burden which leads to filing for bankruptcy. It is commonly believed that student loans cannot be discharged in bankruptcy, but, fortunately, this is not always true. A knowledgeable bankruptcy lawyer can often find ways for you to obtain relief from at least part of your student loan debt or find resources such as deferments that enable you to get caught up on student loan payments. And filing bankruptcy can make it possible for you to get a fresh financial start by wiping out other debts. It may even be a way to help save your marriage.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 modified the bankruptcy code to allow discharge of student loans only when the debtor is able to prove that repayment would cause “undue hardship.” To qualify, you must meet the “Brunner” test, a three-part test used to evaluate whether you are able to continue to pay off a debt:
- Have you made a good faith effort to repay the student loans?
- Will you be unable, based on your current income and expenses, to maintain a minimal standard of living for yourself and any dependents if forced to repay the loans?
- Are there additional circumstances that exist that indicate that this state of affairs is likely to persist for a significant portion of the repayment period for the student loans?
If you can prove undue hardship, your student loan may be completely canceled. Even if you cannot prove undue hardship, filing for bankruptcy can give you some breathing space, as it also automatically protects you from collection actions on all of your debts, at least until the bankruptcy case is discharged or until the creditor gets permission from the court to start collecting again.
Contact Us for a Free Consultation
If you have questions about your student loan or any other debt, the seasoned and compassionate Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer can help We offer a free consultation to evaluate your entire financial situation and explore both bankruptcy and other options, such as negotiating with the lender to get more favorable terms and modification or consolidation of the student loan debt.
We are dedicated to getting the best possible outcome to help you decide on the path to a brighter future that makes sense in your individual case. We understand what you are going through and will walk you through the process.
Delaying can only worsen your situation, so contact us online or call Fesenmyer Cousino Weinzimmer today for your free consultation so we can determine what debt relief solutions will work best for you.