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What happens to student loans when the marriage ends?

In Kentucky, couples who are getting divorced often carry student loan debt. Many times, both spouses possess this type of debt. It is more common to graduate college indebted for years because of the cost of education. In the divorce process, the issue of which spouse is responsible for the debt repayments or how the couple is going to divide their debt often arises.

Kentucky is not a community property state. This means that loans that one party owes are not presumed to be counted against the marital estate. The general rule that applies is that the party whose name is on the loan is the one who is responsible for paying it back whether he or she took out the loan before or after the marriage. If the other spouse co-signed the loan, the rule does change. This would still make the spouse responsible for paying the loans back if the borrower defaults even if the two are no longer married. The co-signing spouse could try to obtain a release from the person who borrowed the money and may include that in the divorce agreement.

In the meantime, when one or both divorcing spouses have incurred student loan debt, they should take steps to lower their student loan payments or get some flexibility from the lender. This could be through a consolidation loan or an income-based repayment plan that could save money.

A divorce attorney might help his or her client avoid being stuck with someone else’s debt by negotiating protections for him or her from the debt in the divorce agreement. If there is the chance that a lawyer’s client is taking on his or her ex-spouse’s debt, he or she might seek to have his or her client awarded a larger portion of the marital assets to compensate him or her for the debt that he or she is assuming.