How Are Student Loans Handled in an Illinois Divorce?

In divorce, it is not just the assets that are divided. Instead, divorcing couples must also split their debts. With more than 44 million student loan borrowers in the United States, all with a total debt of about $1.4 trillion, you can be sure that, in at least some divorces, there is a distribution of student loan debts. When and how does this happen? How might it impact your Illinois divorce? The following explains, and it provides details on where to find assistance with your case.

Marital versus Non-Marital Student Loan Debt

Like with assets, distribution of debt typically only debts that were acquired during the marriage. As such, student loans that were obtained before marriage are likely to be excluded from the marital estate. It is important to note, however, that student loan debt does not automatically become a part of the marital estate, just because the debt was incurred over the course of the marriage. Instead, there are several factors that may be used to determine whether the student loan debt is a part of the marital estate. These factors include:

• When in the marriage the debt was incurred;
• How the money was used (i.e. student loans used to cover housing expenses may become marital property);
• If a degree was obtained;
• Who benefited from the debt (if the debtor graduated just before the divorce, the debtor may be considered the sole beneficiary, which may exclude the debt from the marital estate);
• The earning power of each party; and
• Any tax implications related to the debt.

Even when taking these factors into consideration, it is important to note that courts are not always consistent in their division of student loan debts. As such, it is important to have someone representing your rights and best interests throughout the divorce process.

Dividing Student Loans in Divorce

Whenever student loans are included in the marital estate, they are divided according to the state’s divorce laws. In Illinois, an equitable distribution state, that means the debt is divided “fairly” rather than equally. Unfortunately, the definition of “fair” can vary, depending on your perspective. As such, the courts have several factors that they use to determine how debts and assets should be divided in an Illinois divorce. These factors include the:

• Duration of the marriage;
• Earning power of each party;
• Income and assets of each party;
• Realistic earning capacity of each party;
• Impairment of earning capacity of each party (if any);
• Standard of living established during the marriage;
• Allocation of parental responsibilities;
• Parenting time distribution;
• Tax implications of debt and asset distribution;
• Pre-existing agreements between the parties (i.e. prenuptial agreement); and
• Any other factors the courts deem relevant.

Contact Our DuPage County Divorce Lawyers

If you are planning on filing for divorce, contact Mevorah & Giglio Law Offices for assistance. Dedicated to your best interest, our DuPage County divorce lawyers can examine your situation, inform you of your options, and guide you through the divorce process. At every turn, we pursue the most favorable outcome possible. Schedule your free initial consultation with us to learn more. Call 630-932-9100 today.

Sources:

https://www.forbes.com/sites/jefflanders/2013/12/17/are-student-loans-incurred-during-the-marriage-considered-marital-debt/#7878f2fb3f9b

https://studentloanhero.com/student-loan-debt-statistics/

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000