Is a Spouse Responsible for Student Loans Incurred Before Marriage?
In Colorado, student loan debts incurred by either party before marriage are considered separate property and are the sole responsibility of the borrower. If a student loan debt was incurred during a marriage, it may end up divided between the spouses.
Equitable Distribution of Property
Colorado follows the equitable distribution rule when dividing marital property. This means a judge will divide assets and debts based on what they deem to be fair. The court divides property based on the following factors:
- each party’s contribution to the acquisition of marital property (including contributions to the upkeep of the family home);
- the value of property each spouse will receive;
- the financial circumstances of each spouse; and/or
- any relevant changes in the value of property.
If the student loan benefitted both parties in the marriage, it may end up divided between the spouses. The amount each party is responsible for will vary, depending on each marriage. For example, if one spouse earns significantly more than the other, a judge may choose to award most of the debt to that spouse.
Jointly Consolidated Student Loans
Effective July 1, 2006, the United States Congress declared that married couples could no longer jointly consolidate federal student loans. This means a couple cannot pay off one spouse’s student loans using debt consolidation. This ruling, however, does not affect borrowers who consolidated loans between 1993 and 2005.
The consolidation will only be an issue if one party cannot afford to pay their share of the loan Additionally, joint borrowers are not permitted to apply for income-based repayment plans without providing financial information from their former spouse.
The issue of student loan division can be extremely complex, especially if you aren’t sure how to divide it. Our attorneys are well-versed in property division law and can help you decide which debts belong to which parties.
Call our firm today at (303) 647-4245 or contact us online for a case evaluation.