Javed emails: If married and filing tax jointly, does student loan debt then become the burden of both parties if only one member has student loan debt?
How you file your taxes has nothing to do with how the debt gets divided. The fact that you are married, though, could have some implications.
Broadly speaking, the burden of debt depends on when the debt was incurred, either before or during the marriage. “In general, debts incurred before a marriage do not automatically become a joint debt upon marriage,” says Mark Kantrowitz, student aid expert and senior vice president and publisher of Edvisors. “The spouse would have to take a specific action to become responsible for the prior student loan debt.”
On the other hand, if one spouse acquired a loan or debt during the marriage and the couple resides in one of the country’s nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) there’s a chance that the debt could be deemed a joint liability in the event of divorce. “If the debt benefits the marriage or there is some indication that the debt was jointly undertaken, such as the lender requiring credit reports for both spouses,” then you might both be on the hook, says Kantrowitz.
That said, some community property states have exceptions for student loans or other debt tied to education or training. “It’s treated as separate debt since the education benefits the individual more than the marriage,” says Kantrowitz.
Keep in mind that if you have joint savings and checking accounts and if one of you falls behind on personal debt, creditors could seek repayment from the borrower’s income and property, including joint income and joint property. The rules and extent of this depend, again, on your state. “Some states preclude using joint income and assets to repay separate debts, some limit it to half, and some allow the full amount of joint income and assets to be a target,” says Kantrowitz. “They cannot seek repayment through the non-borrower spouse's separate income and separate property, but if the borrower and spouse commingle their funds or own property jointly, it can become a target for creditors.”
To further investigate, seek the advice of a qualified attorney who understands your state’s law who can review your specific situation.
Send Farnoosh your financial questions on Twitter @Farnoosh or email her FarnooshFinFit@yahoo.com.