IS CONTINGENT DEBT SUBJECT TO DISTRIBUTION? A Student Loan Guaranty Needs to be Addressed in Divorce

A panel resolution issued April 27, 2022 takes on a difficulty heretofore undecided in Pennsylvania however a difficulty of monumental consequence to many marital estates; the matter of student debt.

Massar v. Massar includes a 20 12 months marriage that produced two kids ages 23 and 19. During the wedding the eldest youngster attended Bloomsburg and Temple Universities and assumed $58,000 in student debt through the marriage, which Father assured. In equitable distribution the husband requested the courtroom to deal with the debt ought to the kid default on the duty and set off father’s warranty. In addition, husband took on what was termed a “Discover parent’s loan” of $13,000. Wife borrowed $5,000 towards commencement bills.

The Hearing Officer determined that the $58,000 loan was not a marital debt as there had been no default triggering husband’s duty as of the time of the listening to. The officer additionally opined that ought to a default happen husband was in a superior place financially to deal with it. The trial courtroom in Lebanon County authorized that advice.

The Superior Court didn’t. In reversing the Court famous that “all liabilities accruing during the marriage” had been marital debt whether or not incurred by one celebration or each. Goodwin v. Goodwin, 244 A.3d 453 (Pa. Super. 2020: on attraction to Pa Supreme Court). Passing this debt to husband in a case that in any other case concerned his receipt of 45% of property, cost of alimony and counsel charges was an abuse of discretion meriting additional consideration.

There are some fascinating points trapped on this ruling. Suppose one dad or mum ensures the debt of a kid with out the data or consent of his/her partner? Suppose the debt is for a kid from one other relationship previous the wedding? Suppose one partner asks the opposite to affix in guaranteeing or assuming major duty for a kid’s student debt and that partner declines to do it? Can that partner nonetheless be liable? If, throughout marriage, I agree to ensure my youngster’s dwelling mortgage and the kid doesn’t pay, can I ask the courtroom to assign a part of the debt to my soon-to-be ex? The permutations are each huge and troubling. In the previous 12 months we encountered a case the place on December 31 of 1 12 months, a dad or mum gave his daughter a multi-million present of inventory in his enterprise. One day later, daughter signed a shareholder’s settlement which dedicated her to ensure the money owed of pop’s company, if requested. Was the present non marital whereas the debt arising from the warranty one thing else? Put in a abstract style, can one partner type transactions which eradicate the marital property with out the opposite partner even understanding about it?

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More to come back…..

Massar v. Massar, 316 MDA 2021 (4/27/22). Non precedential