Most people assume that when they get a divorce, they will walk away free and clear from their spouse’s student loan debt. After all, it was the spouse who incurred the debt, so why should the other spouse be on the hook for this debt? Unfortunately, a divorce decree may not be enough to free someone from their ex-spouse’s student loan debt.
One reason a person might find themself responsible for their ex-spouse’s student loan debt has to do with joint consolidation. This federal program was short-lived, but many people took advantage of it while it was available. In fact, nearly 14,000 student loan borrowers participated in the joint consolidation program, which Congress ended in 2006. Joint consolidation allowed married couples to take their separate student loan debts and combine them into one monthly payment with a lower interest rate. However, once these debts are combined, it can be difficult to separate them in the event of a divorce.
Legislation has been introduced by Sen. Mark Warner, D-Va., and Rep. David E. Price, D.-N.C., that would allow these joint loans to be split proportionally between ex-spouses in the event of divorce or end of a domestic violent relationship. These loans would be split based on the original loan amounts at the start of consolidation.
This bill was first introduced in 2017 after a constituent reached out to Senator Warner. The woman involved was attempting to escape a violent relationship, but she could not get away from this mutual debt between the parties. Once the bill was introduced, more people reached out to Senator Warner with similar stories.
Finances play a major part in relationships involving domestic violence. Experts call this economic sabotage where the abusive partner uses finances and hurts the other partner’s credit as a form of abuse. Finances are often the reason why victims stay in abusive relationships, for fear of not being able to provide for themselves and their children in the event they leave their partners. By allowing them to divorce themselves from their partner, as well as their partner’s debt, they are set free.
Borrowers, including those trapped in joint consolidation with ex-spouses, did receive reprieve through the temporary pause on federal student loan payments. However, as that pause ends on May 1, this break will soon be over.
While the legislation has been introduced, it is not quite clear whether the bill will successfully be passed, but until it is passed, borrowers who signed into joint consolidation agreements with their now ex-spouses will remain stuck in a no-win situation.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
