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Who Is Responsible for Student Loan Debt in an Indiana Divorce?

On Behalf of | Jan 23, 2020 | Family Law

Who will be responsible for student loan debt when a couple divorces in Indiana generally depends on when the loans were incurred. Although most debts are combined with assets as part of marital property and divided fairly between spouses, student loans that were acquired before the marriage are usually the responsibility of the borrowing spouse.

Divorce Liability for Student Loan Debt

When going through an Indiana divorce, all assets and debts must be divided according to state laws. Assets acquired prior to and during a marriage can be subject to division in a divorce. Property division may be agreed upon between the spouses through a property settlement or legal court proceeding through an Indiana divorce lawyer.

The division of marital property may be more complicated in an equitable distribution state like Indiana since each spouse has a legal right to a fair portion of any assets. Based on certain factors, this may or may not result in a 50-50 split. The court will likely have the final say.

Indiana also divides debt acquired during the course of a marriage as well as loans acquired before the couple was married regardless of which spouse owns the debt.

Although Indiana has no statute that requires courts to consider a spouse’s contributions to their partner’s education, student loan debt may be lumped with other debts and assets when dividing marital property.

Student Loan Debt Acquired Prior to Marriage

In most cases, student loan debt incurred prior to marriage is the responsibility of the spouse who incurred the debt. If both spouses have student loan debt prior to marriage, each spouse is typically liable for their own debt. If one spouse’s debt is higher, a divorce lawyer can navigate an acceptable agreement that balances debts and assets.

Student Loan Debt Acquired During Marriage

Dividing student loan debt acquired during marriage may be more complex, because the spouse who acquired the debt may not be the primary breadwinner in the family or the one making loan payments. The court may consider which spouse’s credit was used to take out the student loan, what the money was used for, and which spouse benefited most from the loan.

When considering student loan debt in a divorce, a spouse’s income and ability to support dependents can impact the division. If one spouse has no significant income or earning potential, the court will be less likely to assign student loan liability to that spouse.