When contemplating getting a divorce, people often think about marital assets and dividing them equitably, whether that’s furniture, real estate, or cash and retirement accounts. But they sometimes need to consider what happens to debt in a divorce, especially student loan debt. As student loan debt numbers soared in recent years, this becomes a very real and considerable concern. Here’s what you need to know in Tennessee.

Is Tennessee a Community Property or Equitable Distribution State?

This is an important question, because it can have serious bearing on the division of assets and debts. A community property state is one in which just about everything acquired during the marriage, including loans, is considered marital property and must be divided as equally as possible.

Tennessee is not a community property state. Instead, it’s an equitable distribution state which is defined as striving to come to a settlement that’s fair to each party. That means that in many (but not all) cases, a loan taken out during the marriage that’s only in one of the spouse’s names is the full responsibility of that spouse. When the other spouse co-signs, they become responsible for half.

Will Both Spouses Have to Pay for One Spouse’s Student Loan Debt in Tennessee?

Every divorce is unique, and consequently who pays for student loan debt varies depending on the circumstances. In general, in Tennessee, there are three scenarios that are commonly seen in divorce court:

  • Student loan debt acquired before the marriage.
    • When this is the case, the court leans toward leaving the debt to the person who acquired it before the marriage. That’s because it had no ties to the marriage itself. 
  • Student loan debt acquired during the marriage.
    • This is more complicated. If the court thinks that both spouses had some benefit as a result of the student loan debt, such as the student eventually getting a better job that led to an increased standard of living, then the court may rule that both spouses will pay the debt. If the loan was used in part for things that both spouses benefited from, such as housing or utility bills, it’s likely to be considered marital property. 
  • Student loan debt owned by a spouse that can’t afford to pay it.
    • Suppose there is a significant economic disparity between the spouses at the time of separation and divorce, and the poorer spouse can’t afford the student loan payments. In that case, the court may decide that the other spouse has to contribute partially or fully to paying down the loans. 

How Is Equitable Distribution Determined by the State?

The judge will look into several circumstances that affect determining equitable distribution. These include, but aren’t limited to:

  • Income, present and potential, of each spouse
  • Age and physical and mental health of each spouse
  • Length of the marriage
  • Value of any separate property
  • Whether one spouse made financial sacrifices for the other spouse’s education or job, such as not getting an advanced degree or stayed at home to raise children

Are Student Loans Treated the Same as Other Types of Debt in Tennessee?

Foundationally, yes, but there are variances depending on the situation. For example, if one spouse has a credit card with a high balance, and it’s only in that spouse’s name (not a joint account), but the card was used to buy things that benefited both spouses (groceries, furniture, vacations), the court may decide both spouses need to pay it down (as long as both can afford to do so).

Another example is if one spouse gets full ownership of a house. They likely will also get full ownership of any accompanying mortgage or lines of credit attached to the house, even if such debts were originally in both spouses’ names.

What Happens With Medical Debt During a Divorce in Tennessee?

Medical debt includes past-due medical bills which can range from visits to doctors, dentists, therapists, and eye specialists; surgery and surgeons; hospital stays; medical devices, equipment, and medication; lab tests; and medical transportation such as ambulance rides. How it’s handled is similar to other types of debt.

If the debt was incurred by one spouse before marriage or after separation, it’s usually their full responsibility. If it was incurred during the marriage, it’s likely going to be considered marital property, with both spouses expected to contribute to paying it down.

What Happens When There Was Infidelity or Fraud in the Marriage?

This is very specific to each case, but infidelity or fraud can be considered an extenuating circumstance that could overcome the equitable distribution of assets and debt. That’s especially applicable if one spouse ran up debt under the other spouse’s name without their knowledge or consent.

What Should I Do if My Divorce Involves Student Loan Debt?

Call me at 615-970-6448 to request an no-obligation case evaluation as soon as possible. Whether you’re the spouse with student loan debt or the spouse without, my office has the experience and knowledge to help you achieve the best possible outcome. Divorce is one of life’s most stressful events, and I’m here to do everything I can to make the process as smooth as possible for you. I will look out for your best interests from beginning to end.

Because each divorce case is unique and can have many variables at play, the sooner you bring in an experienced divorce lawyer, the better. I can walk you through what the likely outcomes are for all aspects of your divorce, including the question of student loan debt and any extenuating circumstances that could sway the judge to decide in your favor.