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Dividing Student Loan and Other Debt Upon Divorce

Arizona is one of nine community property states in the country. The state’s community property statute states that virtually all assets, including real estate holdings, investments, cash and savings, are divided equally upon divorce. This law applies to debt as well.

Student loan debt that benefits only one spouse

While the division of community debt might sound simple, some debts that are acquired during the life of a marriage do not necessarily benefit both spouses. In other words, if your partner went back to school to pursue a postgraduate degree and took out student loans to do so, you are both responsible for the repayment of the loan unless you can prove that your spouse’s degree has not benefited you. In assessing the benefit of the debt to both marriage partners, a judge considers such factors as:

  • Whether or not both partners benefited from an increase in household income as a result of the debt
  • At what point in the marriage one partner incurred the debt
  • How many assets the partners have
  • What type of financial burden the repayment of the loan would have on each partner 

Since student loans are given at a very favorable rate, if repayment is an issue for either partner, the loan agent may be able to renegotiate the terms so as not to create a financial burden.

Credit card debt that is divided between you and your spouse

Credit card debt is also divided equally between partners, but this might not be quite so simple. As soon as you begin divorce proceedings, it is common practice for couples to close out joint accounts and credit cards and to transfer the balances to separate cards.  

Even if you agree to divide your credit card debt in half — as is usually the practice in Arizona — the credit card company is not bound by your agreement. If your ex defaults on credit card payments, the company can still come after you to pay off your former partner’s share of the debt. 

The division of debts is not a simple matter. Tucson divorce attorney Steven C. Weinstein can help advocate for your financial rights during your divorce.

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