Student Loans: Are They Marital Debt?

Section 1513 of Title 13 of the Delaware Code governs the disposition of marital property. In a proceeding for divorce or annulment, the Family Court shall, upon request of either party, equitably divide, distribute, and assign the marital property between the parties. This happens without regard to marital misconduct, in such proportions as the Court deems just after considering all relevant factors. 

"Marital property" is defined by statute. It includes all property acquired by either party subsequent to the marriage, irrespective of how it is titled, with certain enumerated exceptions. Those exceptions include gifts, except gifts between spouses, property acquired in exchange for property acquired prior to the marriage, property excluded by valid agreement of the parties, and the increase in value of property acquired prior to the marriage.  

The Family Court has consistently interpreted marital property to include both assets and debts. Accordingly, debts incurred by either party subsequent to the marriage, irrespective of how it is titled, may be divided by the Family Court ancillary to a divorce or annulment upon the request of either party. Marital debts can include mortgages, home equity loans, vehicle loans, loans against 401(k) plans, credit card debts, personal loans, and, yes, even student loans taken out in a spouse's name for his or her personal benefit or the benefit of his or her children.  

While the Court has discretion on how to divide a student loan debt, i.e. the percentage distribution between the parties, make no mistake, it will be considered part of the marital estate. That is, unless the parties have a valid agreement stating otherwise.

Spouses can reach an agreement as to how to divide certain assets and debts at any time -- prior, during or after the marriage. It is important to consult with an experienced lawyer to draft your agreement because not all contracts are deemed enforceable. You can click here and send us an email if you have questions about drafting a valid agreement for division of assets and/or debts.