Student Loans and Divorce In Illinois

Student Loans and Divorce In Illinois

Everyone is aware of that you simply break up the property in a divorce however folks hardly ever contemplate that you simply even have to separate up the money owed.  Usually money owed are related to an asset like a home and a automotive so whoever retains the asset, retains the debt.  When it involves student loans, nevertheless, there is no such thing as a bodily asset.  So, who’s accountable for the student loans in an Illinois divorce?

Is The Student Loan Debt Non-Marital?

All debt {that a} divorcing individual holds of their title or within the different partner’s title is both “marital” or “non-marital”

It’s somewhat complicated however the Illinois statute defines marital debt as “marital property”

“”marital property” means all property, together with money owed and different obligations, acquired by both partner subsequent to the wedding” 750 ILCS 503(a)

The Illinois statute goes on to make clear what marital property is.

“For purposes of distribution of property, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property.” 750 ILCS 5/503(b)

An Illinois divorce courtroom should qualify every type of property or debt as both being marital or non-marital.

“The court shall make specific factual findings as to its classification of assets as marital or non-marital property, values, and other factual findings supporting its property award.” 750 ILCS 5/503(a)

The non-marital debt stays with the one who’s title that debt is in.

“[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d)

Realistically, most student loan debt is incurred when the events are faculty age and never married to one another. So, non-marital student loan debt MUST stick with the celebration that incurred that student loan debt.

How To Divide Marital Student Loan Debt In An Illinois Divorce?

If the student loan debt was incurred through the marriage then it could be distributed by the courtroom.

An Illinois divorce courtroom “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors.750 ILCS 5/503(d)

So, you possibly can see there is no such thing as a 50/50 division rule in Illinois.  Illinois is assessed as an “equitable distribution” state.  Meaning that judges distribute property and money owed between a divorcing couple as that Illinois divorce choose believes is honest. Usually, an Illinois divorce choose will lean in the direction of dividing property and money owed 50/50.   If you desire a choose to NOT divide a student loan debt 50/50 it’s essential level to the statute. 

READ:   Should I consolidate my federal student loans right into a federal Direct Consolidation Loan?

Making the Student Loan Borrower Be Responsible For Their Student Loan In An Illinois Divorce.

“[E]ach party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property” 750 ILCS 5/503(d)(1)

This is fairly easy, the student loan borrower is the one who contributed in the direction of the debt, due to this fact they need to preserve that student loan debt.

“[T]he value of the property assigned to each spouse” 750 ILCS 5/503(d)(2)

This clause means that you can level out that the partner basically bought the diploma that they’ve with their student loan.  That partner believed the student loan was a good worth for the diploma. Therefore, the diploma has worth and the student loan is at the very least well worth the worth of the diploma.

“[P]rofessional licenses and scholastic degrees do not constitute a property interest subject to division as a marital asset” however the loans related to these licenses and levels will be topic to division and due to this fact these obligations ought to stay with the license or diploma holder. In re Marriage of Thornley, 838 NE 2nd 981 – Ill: Appellate Court, 4th Dist. 2005

This appears like a stretch however many divorce judges in Cook County have defined this precise logic to me when allocating student loan debt to the borrower.

 “[T]he relevant economic circumstances of each spouse when the division of property is to become effective, including the desirability of awarding the family home, or the right to live therein for reasonable periods, to the spouse having the primary residence of the children” 750 ILCS 5/503(d)(5)

Using an identical logic, you possibly can suggest that the partner who incurred the student loan now has a better revenue and, due to this fact, can afford the longer term accountability for the student loan.

READ:   When Is the 2021-22 FAFSA Deadline?

 “[T]he age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and needs of each of the parties” 750 ILCS 5/503(8)

This portion of the statute actually mentions “occupation, amount and source of income, vocational skills, [and] employability.”  These all stem from and may contribute to the student loan.

“[T]he reasonable opportunity of each spouse for future acquisition of capital assets and income” 750 ILCS 5/503(d)(13)

Again, the partner can be buying property sooner or later due to the student loan so shouldn’t that very same partner be accountable for the student loan?

The courtroom has the appropriate to allocate 100% of a debt to at least one specific celebration. “Where one party is substantially responsible for the creation of the debt and has a substantially greater capacity to earn money, it is not an abuse of discretion for the trial court to assign the overwhelming majority of debt to that party.” In re Marriage of Werries, 247 Ill. App. 3d 639, 649-51 (1993)

In conclusion, take the case of the dutiful spouse who put her husband by medical faculty. She shouldn’t be anticipated to be accountable for her husband’s student loans and she or he ought to count on to get a further portion of the marital property based mostly on her sacrifices and his good points from these sacrifices based mostly on the statutes I listed above.

Splitting Up The Responsibility For A Student Loan

In the choice, if you’re the student loan borrower and wish your partner to be accountable for a part of the student loan, you should use the identical causes to ask the choose for them to contribute to your student loan.

The non-borrowing partner knew you had been taking out the student loan and consented to it.  The non-borrowing student loan.  The non-borrowing partner knew they may afford the student loan as a pair. 

READ:   IRS Private Ruling on Student Loan Benefit Under 401(ok) Plan Likely to Fuel Interest

Some student loans merely don’t have a giant return on funding. A Masters In Social Work might not pay a lot…and your partner knew that when the loan was taken out.

Finally, you possibly can argue totally different money owed shouldn’t be handled in another way.  That’s essentially unfair.  Each celebration ought to contribute to ALL marital money owed.

What If The Student Loan Was Refinanced During The Marriage?

Typically, student loans have very low rates of interest as they backed by the federal government.  Student loans had been hardly ever, if ever refinanced or consolidated prior to now.

With rates of interest hitting zero and firms like SoFi, student loans will be refinanced…particularly when the non-borrowing partner’s revenue can now be accounted for within the new refinance. 

Refinancing in each events’ names normally turns non-marital property into marital property underneath Illinois regulation.

“If marital and non-marital property are commingled into newly acquired property resulting in a loss of identity of the contributing estates, the commingled property shall be deemed transmuted to marital property” 750 ILCS 5/503(a)(5)(b)

At this level, the non-borrowing partner develop into a co-borrowing partner and will certainly be accountable for a part of the student loan.

When student loans…or any debt for that matter develop into marital, then marital property ought to be bought to fulfill the marital debt so you might be now not entangled along with your ex-spouse.

“The court may make such judgments affecting the marital property as may be just and may enforce such judgments by ordering a sale of marital property, with proceeds therefrom to be applied as determined by the court.” 750 ILCS 503(i)

If you’d like to debate what is going to occur along with your student loan debt or your partner’s student loan debt in your Illinois divorce, contact my Chicago, Illinois household regulation agency and schedule a free session with an skilled Chicago divorce lawyer.

Leave a Comment

Your email address will not be published.