Source: http://www.va-familylaw.com/is-a-student-loan-debt-a-marital-debt-or-a-separate-debt-in-a-virginia-divorce/
Timestamp: 2019-11-19 00:52:28
Document Index: 626418589

Matched Legal Cases: ['§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20']

Is a Student Loan Debt a Marital Debt or a Separate Debt in a Virginia Divorce?Virginia Family Law Blog
Is a Student Loan Debt a Marital Debt or a Separate Debt in a Virginia Divorce?
Posted on May 6, 2012 by Nicholas Solan
Again a judge renders an uninteresting decision using an interesting rationale.
In the case of Damankah v. Damankah (CL-09-000345), the Salem Circuit Court determined that husband’s student loan debt acquired during the marriage and prior to the final separation of the parties was marital debt subject to apportionment under Virginia Code § 20-107.3. The court then apportioned the entire debt to husband. The court held:
“Although testimony was presented in the instant case that a portion of the student loan was used directly for family living expenses, no evidence was presented as to what portion of the loan was spent for those expenses. Husband contends that the entire loan was for marital purposes because part was used directly for living expenses and part to enable him to increase his earnings for the benefit of his family. He concludes, therefore, that it is a marital debt. Wife denies that. The Court cannot guess or speculate as to the facts of a case or the actual division or expenditure of loan proceeds. The student loan debt solely in Husband’s name was obviously used, at least in part, for the direct support of the family, and it did increase Husband’s earnings. Considering the limited evidence before the Court, the factors set forth in § 20-107.3(E), Code of Virginia (1950), as amended, especially those factors dealing with the length of this marriage, the health of the parties, the actual grounds for divorce, Husband’s stated but unproven reason for leaving the family, the disparity in education, the original purpose of the loan, the lifetime benefits to be received from that debt by Husband, the present and future earning potential of Husband and Wife and the disparity therein, the Court finds that Husband’s student loan has been proven to be marital property. For the reasons set forth herein, the Court finds that the debt should be paid in full by Husband, the same as if it were his separate debt. No portion of it will be assigned to the Wife, and neither party will be required to pay an equitable distribution award to the other.”
That the court apportioned the entire student loan debt to husband is not surprising given the facts recited above, particularly that the marriage lasted no more than 8 years prior to the marital separation and that the husband alone would benefit from his education moving forward. That the court determined that the student loan debt was marital debt in the first instance is also not surprising, considering it was incurred during the marriage and used for clearly marital purposes. The interesting nuance is that the court bothered to look at the factors under Va. Code § 20-107.3(E) to help him determine that the student loan debt was marital.
The Virginia Code’s language defining separate and marital debts is relatively straightforward. Virginia Code § 20-107.3(A)(4) and (5) state:
“4. Separate debt is (i) all debt incurred by either party before the marriage, (ii) all debt incurred by either party after the date of the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, and (iii) that part of any debt classified as separate pursuant to subdivision A 5. However, to the extent that a party can show by a preponderance of the evidence that the debt was incurred for the benefit of the marriage or family, the court may designate the debt as marital.
5. Marital debt is (i) all debt incurred in the joint names of the parties before the date of the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, whether incurred before or after the date of the marriage, and (ii) all debt incurred in either party’s name after the date of the marriage and before the date of the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent. However, to the extent that a party can show by a preponderance of the evidence that the debt, or a portion thereof, was incurred, or the proceeds secured by incurring the debt were used, in whole or in part, for a nonmarital purpose, the court may designate the entire debt as separate or a portion of the debt as marital and a portion of the debt as separate.”
The student loan debt in this case was incurred in husband’s name after the date of the marriage and before the date of the last separation of the parties. The court apparently received no evidence suggesting that the student loan debt was used for a nonmarital purpose. Instead, the student loan debt was used to finance the husband’s education and pay some living expenses. So the student loan debt was clearly marital debt under Va. Code § 20-107.3(A)(5).
Nevertheless, the court looked at Va. Code § 20-107.3(E) in determining whether the student loan debt was marital or separate debt. That section states:
“E. The amount of any division or transfer of jointly owned marital property, and the amount of any monetary award, the apportionment of marital debts, and the method of payment shall be determined by the court after consideration of the following factors:
1. The contributions, monetary and nonmonetary, of each party to the well-being of the family;
2. The contributions, monetary and nonmonetary, of each party in the acquisition and care and maintenance of such marital property of the parties;
4. The ages and physical and mental condition of the parties;
5. The circumstances and factors which contributed to the dissolution of the marriage, specifically including any ground for divorce under the provisions of subdivisions (1), (3) or (6) of § 20-91 or § 20-95;
6. How and when specific items of such marital property were acquired;
7. The debts and liabilities of each spouse, the basis for such debts and liabilities, and the property which may serve as security for such debts and liabilities;
8. The liquid or nonliquid character of all marital property;
9. The tax consequences to each party;
10. The use or expenditure of marital property by either of the parties for a nonmarital separate purpose or the dissipation of such funds, when such was done in anticipation of divorce or separation or after the last separation of the parties; and
11. Such other factors as the court deems necessary or appropriate to consider in order to arrive at a fair and equitable monetary award.”
There is nothing in Virginia Code § 20-107.3 permitting the court to consider the factors above in determining whether a debt is marital or separate and the plain language of subsection (E) makes clear that it has nothing to do with determining whether a debt as either marital or separate. Rather, that section is brought to bear only after a debt has been determined to be marital. Indeed, the appellate caselaw supports this: “The court first must classify the property as either [separate, marital, or part separate and part marital property]. The court then must assign a value to the property based upon evidence presented by both parties. Finally, the court distributes try property to the parties, taking into consideration the factors presented in Code § 20-107.3(E).” Alphin v. Alphin, 15 Va. App. 395, 424 S.E.2d 572 (1992). Besides, it certainly makes sense for the court to make decisions about how to apportion a marital debt by taking into consideration the length of the marriage, the health of the parties, the actual grounds for divorce, the reasons for the dissolution of the marriage, the disparity in education between the parties, the original purpose of the debt, the lifetime benefits to be received from that debt, and the present and future earning potential of the parties. It makes little sense for the court to take that evidence into consideration when determining whether a debt is marital or separate. So why did the court do so when there is no statute or case law telling it do so or even giving it the authority to do so?
– Nicholas Jon Solan is a founding partner of Solan Alzamora, PLLC in Fairfax, Virginia. He specializes in family law matters throughout Northern Virginia, including divorce, custody, support and equitable distribution matters. He can be reached at (703) 359-0088 or nsolan@SAlawfirm.com or www.SAlawfirm.com.
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About Nicholas Solan
Nicholas Jon Solan is a founding partner at Solan Alzamora, PLLC in Fairfax, Virginia. He specializes in family law matters throughout Northern Virginia. He can be reached at (703) 359-0088, nsolan@SAlawfirm.com, or www.SAlawfirm.com.
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