Marriage brings with it a multitude of responsibilities, from managing finances to household chores, and raising children. Unfortunately, some marriages come to an end, leading to a complex web of questions and concerns. One common query that arises during a divorce is regarding the responsibility for repaying student loans acquired during the marriage. In this article, we will delve into the details of student loans in New Mexico divorce cases.
Differentiating Marital and Non-Marital Debts
Before exploring the specifics of student loans, it is crucial to understand the distinction between marital and non-marital debts. Marital debts encompass those incurred during the marriage, while non-marital debts refer to those acquired prior to the marriage or after separation.
In New Mexico, the division of marital property is conducted on an equitable basis. Consequently, any debts accrued during the marriage must be shared equitably by both parties. It is not unusual for both individuals to bear the responsibility of debt repayment.
During the divorce process, both spouses are required to accurately disclose all debts they acquired throughout the course of the marriage in their financial declarations. Even if one spouse solely incurred a student loan, it would likely be regarded as a marital debt.
Division of Student Loans
Student loans obtained during the marriage, regardless of the individual responsible for acquiring them, are classified as marital debt. During the property division, these student loan debts are considered and equitably distributed.
It is important to note that equitable distribution does not always entail an equal 50/50 split. Divorce judges assess various factors, such as the parties’ income levels and the duration of the marriage. As a result, the debt may be assigned in different proportions.
Inherited Student Loans
Typically, inherited student loans belong exclusively to the spouse who inherited them and are not considered marital debt. Therefore, the responsibility for repayment remains with the inheriting spouse alone.
However, if the inherited student loan is being repaid using funds from the marital property or if both parties benefited from the loan in any way, it transforms into a marital debt.
The Role of the Divorce Agreement
In New Mexico, divorcing couples have the opportunity to negotiate the division of property and marital debts through a divorce agreement. This legally binding agreement stipulates the terms and conditions of the divorce, including the allocation of responsibility for student loan repayment. Once finalized, the agreement becomes an integral part of the divorce decree.
It is important to remember that a divorce agreement, despite being agreed upon by the parties, must still be reviewed and approved by a judge for it to be considered valid.
Repayment Options for Student Loan Debts
Following the divorce, both parties are individually responsible for their respective share of the debt. Failure to meet these obligations can negatively impact the credit scores of both parties involved.
If both parties share responsibility for the debt, it is advisable to coordinate with the lender to ensure timely and consistent payments.
Some individuals may opt to refinance their student loans, making repayment more manageable. The refinancing process involves obtaining a new loan with more favorable terms and utilizing the funds to settle the existing loan.
Wrapping Up
In conclusion, student loans incurred during a marriage in New Mexico are categorized as marital debt. During the property division, these debts are equitably factored in. However, divorcing couples have the opportunity to negotiate the division of debts, including student loans, through a divorce agreement.
It is worth noting that although a divorce agreement may be binding, it still requires judicial approval to be considered valid. Therefore, to ensure the agreement’s legal effectiveness, it is advisable for spouses to seek the assistance of a divorce attorney.