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If we divorce, do we split student loan debt too?

On Behalf of | Jan 5, 2024 | Divorce |

When going through a divorce in Virginia, it is crucial to comprehend the ramifications of student loan debt. The categorization of this debt as marital, separate or hybrid property is key in deciding its allocation between spouses.

Fair distribution in Virginia

Virginia courts strive to divide property and debts in a fair and reasonable manner (the equitable distribution principle). The classification of assets and debts as marital, separate or hybrid hinges on when and how they were acquired.

Types of property in the property division process

Marital property includes assets and debts accumulated during the marriage, regardless of who owns them. Separate property refers to assets and debts acquired before the marriage, received as gifts or inherited during the marriage. Hybrid property pertains to assets or debts that one spouse brought into the marriage, but that were affected or appreciated in value by the other spouse during the marriage.

Determining the difference

Virginia law provides guidelines for the court to determine the distribution of marital and hybrid property and debts. These guidelines take into account factors like the length of the marriage, contributions to the welfare of the family, etc.

What about student loan debt?

The categorization of student loan debt depends on when it was taken on and its purpose. If the student loan debt was incurred before the marriage, it is generally considered separate property. But, if the other spouse contributed to the debt payments or benefited from the education financed by the loan, it could be classified as hybrid property.

On the other hand, debt taken on during the marriage is presumed to be marital property and subject to division. However, one spouse can argue that it served a non-marital purpose or only a portion benefited the marriage.

Allocating student loan debt

When student loan debt is classified as marital or hybrid property, Virginia’s equitable distribution laws apply. This means each spouse could be responsible for a part of the debt based on their individual financial situations. The court may order spousal support or a property settlement agreement that includes debt payments. Alternatively, one spouse’s portion of student loan debt could be balanced with another asset or liability.