My wife and I are separating. She has significant student loan debt that she’s been dodging for approximately ten years. Deferments, then she was safe through COVID, now I’m sure she’s getting pressure to start paying. She may even be delinquent, she’s not honest about her situation. My question is: my attorney has told me I’m not responsible for her loans in PA bc the proceeds were not used for anything other than her schooling. BUT, what if she defaults on her loan? Does that somehow change the status of it from a “student loan” where she alone is responsible for it, to just a “debt” that is now thrown in the pool of our assets and liabilities when it comes time to separate our assets?
My wife and I are separating. She has significant student loan debt that she’s been dodging for approximately ten years. Deferments, then she was safe through COVID, now I’m sure she’s getting pressure to start paying. She may even be delinquent, she’s not honest about her situation. My question is…
byu/Hefty-Camel-9742 inStudentLoans
Posted by Hefty-Camel-9742
6 Comments
Ask your attorney?
Did you co-sign them? If not, you are very likely not liable for anything. (YMMV, obv)
Definitely a question for your attorney, but it sounds like they’re federal. This isn’t like medical debt that will get sold to a collection agency. The government keeps it, it can be rehabilitated. They can garnish wages, no idea if that includes a spouse’s wages, but it wouldn’t follow you after the divorce.
So if they are federal you aren’t legally responsible in the eyes of the education department. However in my career I’ve seen a few cases where a divorce resulted in the ex being responsible in the eyes of the divorce court. In that situation if the ex doesn’t pay the actual borrower is the one that still gets dinged etc…the Ed can’t and won’t change who is responsible on their end…and then the borrower has to take the ex back to court and tell the judge they aren’t paying.
I can’t really answer your question from a separation/legal perspective but I can give you some other random fun facts:
-Direct federal loans are treated differently than private student loans, so that will be a large factor in answering your question
-Direct federal loans are considered:
–Delinquent: Even 1 day late on payment
–90 Days Delinquent: Credit takes hit
–Default: 270 Days – now you’ve got a big problem; severe credit damage, wage garnishment and/or tax seizure can occur
-Private student loans:
–Default: Usually closer to 120-180 days
-Federal students loans have an “in house” collection system, vs private student loans can essentially be sold to whatever collection agency
-If she is in default there is a process to rehabilitate and reenter repayment, which would not just likely help *your* situation, but it will help her too, especially if she’s about to be having to find her own housing and stuff
I assume timeline will also matter and whether or not she actually obtained gainful employment from that degree and if you supported her through it otherwise, etc., but again I have no experience to speak beyond the above. Good luck!
(From experience) you are not responsible for her loans unless you co-signed on them. The confusion may stem from the whole ordeal of taxes and filing joint or separately, which determines the monthly amount. Anyway, while filing out the divorce paper work – assets and debts, her student loans would be listed under HER debts – the only joint debts listed would be joint credit cars, car loans, mortgage etc.
Our student debts were listed as personal debts in our divorce proceedings. Easy peasy.