Student loans are becoming an increasingly more common issue in a Michigan divorce as nearly everyone who holds a degree or certificate ends up in debt these days. Spouses will often want to know which one is responsible for paying back the student loans and if they are responsible for the other spouse’s debts.
In Michigan, the general rule is that one spouse is not responsible for the debts of the other so long as the other spouse is the only one who has signed the loan. Sometimes, a spouse must sign on to a loan that was taken out during the marriage in the capacity of a cosigner. If that happens, their responsibility as a cosigner still endures after the marriage has ended unless the spouse on the loan gives them a release.
Those going through a divorce should try to get ahead of the curve on student loan debt by taking measures that can either lower their payments or give them more time or flexibility to repay. A consolidation loan can lead to lower monthly payments. Rolling out the repayment length can mean more interest but lower monthly payments during a difficult financial time. Finally, an income-based repayment plan can also mean lower payments while the spouse copes with an otherwise difficult financial time in their life.
A divorce attorney could help clarify the obligation of their client when it comes to repayment of student loans. If there is a chance that their client might be saddled with the debt of the other spouse, they might attempt to negotiate a divorce agreement that reflects that when it comes to the division of assets. More than ever, clients need to understand how student loans are treated during a divorce because it might not be what they originally assumed.