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Who is responsible for Student Loans at the time of Divorce?

One common debt that many individuals take on, is that of a student loan. A shared concern among spouses getting a divorce is often who will be responsible for paying off these loans. Debts incurred during marriage are community property.  But there are unique rules with regards to Student Loans.

California Family Code Section 2641, states:

“Subject to the limitations provided below, a loan incurred during marriage for the Education or Training of a party shall NOT be included among the liabilities of the community for the purpose of division pursuant to this division but shall be assigned for payment by the party”

Subdivision (c), further states an Exception to the general rule, which is, the assignment of the student loans “required by this section shall be reduced or modified to the extent circumstances render such a disposition unjust, including, but not limited to, any of the following:

  1. The community has substantially benefited from the education, training, or loan incurred for the education or training of the party.  There is a rebuttable presumption, affecting the burden of proof, that the community has not substantially benefited from community contributions to the education or training made less than 10 years before the commencement of the proceeding, and that the community has substantially benefited from community contributions to the education or training made more than 10 years before the commencement of the proceeding.
  2. The education or training received by the party is offset by the education or training received by the other party for which community contributions have been made.
  3. The education or training enables the party receiving the education or training to engage in gainful employment that substantially reduces the need of the party for support that would otherwise be required.”

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This post first appeared on Divorce Alternatives And Divorce Education For Fam, please read the originial post: here

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Who is responsible for Student Loans at the time of Divorce?

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