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Student debt is an important factor in divorce

In our last post, we talked about the role of financial assets in divorce. One of the assets we didn't talk about is debt. Yes, it may seem like a contradictory thought, but debt is an asset that can be divided in divorce. Credit card debt can be divided amongst the splitting spouses in a divorce. Mortgage payments could be divided in a divorce. And, yes, student loan debt can be divided amongst the spouses when a divorce occurs.

However, it is important to note that splitting student loan debt is not exactly a straightforward proposition. Generally speaking, if the student loan debt was from before the marriage, then it is considered separate property. If, however, the student debt was accrued during marriage, then it may be split amongst the divorcing spouses as a marital asset.

There are considerable stakes here. College students left school with an average of nearly $30,000 in 2012. Many couples who are divorcing may be dealing with extensive debt, and that becomes a very critical issue when dividing assets during the divorce.

Splitting student debt isn't a 50/50 proposition in every case, though. Depending on the circumstances, one spouse may be forced to help his or her ex pay off the debt because their financial circumstances are so different. It's important to discuss your debts -- and the debts of your soon-to-be-former spouse -- with your family law attorney. You will want to protect yourself and ensure you are getting the best possible divorce agreement when it comes to your debts.

Source: Wall Street Journal, "Who Is Responsible for the Student Loans After Divorce?," Charlie Wells, April 13, 2014

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