student loans

Tennessee Divorce and Student Loans

Tennessee residents owe over $31.4 billion in student loans, making it the fifteenth largest total debt in the United States. People likely took out those student loans before they were married. But if they took out the loans while married, knowing who will be responsible for those student loan payments during a divorce in Tennessee is essential.

Dividing marital assets equally is typically what people think about first when considering divorce. But it’s important to remember the debt has to be divided as well during a Tennessee divorce. And as student loan debt soars, it’s become a considerable concern in divorces.

Having all of the information before going into divorce proceedings is vital. We’re going to take a look at how assets and debts are divided during a Tennessee divorce and help paint a better picture of when you may end up being responsible for your spouse’s student loan debt.

What is an Equitable Distribution State?

Tennessee is an equitable distribution state. That means that the courts will split marital property fairly, which may not necessarily mean it is split 50/50.

What is considered marital property? Assets or debt that the parties incurred before the marriage is regarded as separate property, whereas any incurred during the marriage is considered marital property. Only marital property is divided during a divorce. That means that each spouse is responsible for their separate property. 

The judge will consider many factors to split marital property fairly. Some of these factors include:

  • How long you’ve been married
  • Age and health of each party
  • Current and potential income of each spouse
  • Value of separate property of each spouse
  • If one spouse made sacrifices financially for the marriage (i.e., one spouse quit their job to stay home to care for children)

If fraud or infidelity were grounds for your divorce in Tennessee, those are considered extenuating circumstances and could override the equitable distribution of marital property. An experienced Tennessee divorce attorney can help determine if these circumstances can help your case.

Who Pays for Student Loans in a Tennessee Divorce?

Here are some situations commonly seen in a divorce involving student loans.

  1. A spouse acquired student loans before the marriage — Typically, the person who received the student loans will be responsible for paying them.
  2. A spouse acquired student loans during the marriage — This situation can be more complex. For example, if both spouses benefited as a result of the student loan (i.e., the schooling led to a better job and a higher standard of living for the couple), or if part of the loan was used for housing, or to pay for things that both spouses benefited from, it could be considered marital property.
  3. A spouse acquired student loan debt but can’t afford to repay it — If at the time of your divorce, the person who owes the student loans cannot afford to pay them, the judge may decide that the other spouse has to contribute to paying on the loans.

Co-Signing a Student Loan in Tennessee

If your spouse took out a student loan during your marriage, and you were a co-signer, you will still be liable for the loan. That won’t change just because you got a divorce.

You can sometimes ask the lender if you can be released as a co-signer on the loan, but not all lenders will offer this. If the lender allows a co-signer release, the spouse who took out the loan will have to qualify for the loan without a co-signer. That means they may not qualify on their own if they don’t have sufficient income or a low credit score.

Prenuptial Agreements and Student Loans

If you had a prenuptial agreement, that would override state law. Keep in mind, however, that there’s no guarantee that a prenup will hold up in court. If your spouse claims they didn’t have proper legal representation or were coerced, the court may find the prenup void.

And if you co-signed for a loan for your spouse, your prenup will not overturn that. So, for example, if your prenup said that each party was responsible for their own debt, but you then co-signed for your spouse’s student loan, you will still be liable for that loan. 

A Murfreesboro Divorce Attorney, Where You Come First

Whether you have student loan debt or your spouse has student loan debt, and you’re going through a divorce, having an experienced divorce attorney representing you can help you get the best outcome possible for your situation. Divorce is one of the most stressful events you can experience, and you shouldn’t do it alone.

Divorce proceedings can be long and stressful, but Attorney Hunter Fowler will guide you through the process and make things as seamless as possible. Throughout the process, Hunter will look for ways to benefit you as much as possible and will work with you to identify what you want and negotiate for those things. He is determined to do whatever it takes to ensure you are heard and your needs are met.

Contact us today for a consultation.