Can wife’s student loan be considered marital debt in a Virginia divorce?
Yes, according to Dyne v. Dyne, decided by the Roanoke County Circuit Court in the Commonwealth of Virginia, a student loan incurred during the marriage and before the separation for the benefit of both parties can be considered joint marital debt for purposes of the allocation of debt in equitable distribution. In addition, the Virginia divorce court judge held that wife’s payments of the mortgage for the marital residence until it could be sold would be equally distributed along with the small profit from the sale of the home, husband’s share in the form of a small credit against his large debt to wife. Had wife allowed the house to go to a foreclosure auction resulting in a large deficiency, the parties may have been left with few options other than bankruptcy to discharge the debt.
In Dyne, the wife argued her educational loans of $12,117.11 to become qualified to teach school in Virginia should be considered marital debts to be split with the husband. She claimed she incurred theses loans after the parties agreed that her future income as a teacher would provide a stable income and retirement benefits for the family.
Relying on the standards enunciated by the Supreme Court of Virginia in Gilliam v. McGrady, Record No. 090958 (April 15, 2010), discussed herein in answer to the question, “Is debt incurred during the marriage presumed to be marital debt?”, the divorce court judge found that the wife, as the party seeking distribution of the debt, had met her burden to prove the debts incurred in her individual name were in fact hybrid debts. In this case, the Court determined the educational debts were part marital and part separate debt: the wife had borrowed a portion of the money ($2,815.46) following the parties’ separation, but the remainder of the debt ($9,301.65) had been incurred during the marriage with the consent of both parties. Thus, the Court ruled that the debt acquired prior to the separation was considered marital debt to be split between the husband and wife.
In addition to the educational loan distribution, the Virginia Circuit Court ruled on the debts related to the marital residence. While married, the husband had been abusive to his wife, making repeated threats to kill himself or his wife and child. As his behavior continued to escalate, the wife sought divorce and obtained an injunction requiring her husband to vacate the marital residence. The husband blatantly defied the order, changed the door locks, and placed all of the furniture in storage, making it uninhabitable for the wife and child. Because the wife and child could not live in the martial residence, they resided for two years in a furnished apartment. While living in the apartment, the wife alone continued to make payments on the marital home without any contribution from the husband, borrowing $23, 679.16 to remain current on the mortgage, utilities, and repairs. Later, the house sold for a profit of only $929.47, which was held in escrow.
The husband alleged he should not have to share these expenses and claimed that the wife and child could have lived in the premises. Furthermore, he contended that he should be paid one-half the rental value of the house while it remained vacant. The divorce court judge refused to consider these arguments. The wife argued that the debts should be shared, because the husband knew that he had forced the property to become uninhabitable, and her payments for the continued upkeep of the house allowed it to sell at a profit.
Considering the factors of Virginia Code §20-107.3(E), the Court held that the sale proceeds and the marital debts should be divided equally. The Court also held that all of the real estate proceeds should be paid to the wife, and the husband would be granted a credit of $464.73 against the debt, leaving the balance to be paid to the wife at $15,936.05.
You should consult with your Virginia divorce lawyer to discuss how your debts may be treated in equitable distribution.