How Are Medical School Student Loans Handled In a Florida Divorce?
When you’re facing a divorce in Florida, one of the complex financial issues you might encounter is how to handle student loans, particularly medical school student loans. These debts can be substantial, often amounting to hundreds of thousands of dollars, and it’s natural to wonder how they will be treated during the divorce process. Understanding your options and rights is crucial, especially if you and your spouse are seeking a Collaborative Divorce, which focuses on finding amicable solutions privately rather than through a public divorce court battle.
Understanding Marital vs. Non-Marital Debt – Med School Loans
In Florida, the law distinguishes between marital and non-marital assets and debts. Marital debts are those incurred during the marriage, regardless of whose name they are in or who incurred them. Non-marital debts, on the other hand, are typically those incurred before the marriage or after the date of separation.
If you took out medical school loans before you were married, these debts are generally considered non-marital, meaning you would be solely responsible for them. However, if you took out the loans during the marriage, things get a bit more complicated.
Medical School Student Loans as Marital Debt
If your medical school student loans were taken out during your marriage, they will be considered marital debt. This means that both you and your spouse could be responsible for repaying them, even if it was taken out in only one spouse’s name. If some student loans were taken out prior to the marriage and other medical school debt was taken out during the marriage, then some loans will likely be considered non-marital and other med school loans will be considered marital. In a traditional divorce, this could lead to a lengthy and contentious battle, especially if the loans are significant. More commonly, especially in a Collaborative Divorce, only one spouse ends up taking responsibility for paying off the marital portion of the loans, while they also typically get something in return to offset the debt. Alternatively, the other spouse may take on a different set of debts as an offset.
In a Collaborative Divorce, you and your spouse have the opportunity to work together to find a fair and equitable solution. The Collaborative Process encourages open communication and cooperation, allowing both of you to express your concerns and preferences.
At the end of the day, a court will likely order, and most divorcing spouses agree on, an equal distribution of your family’s marital net worth. So, for example, if your family has a total of $3 million in marital assets and $1 million in marital debts, equaling a net marital estate of $2 million, then likely each of you will end up with around a net worth of $1 million from the marital estate (though most people agree to an equal distribution of your marital assets/debts, you can also agree to an unequal distribution if it makes sense for your family or as an alternative to alimony). For this reason, when determining how you are going to split your assets and debts, it is important to look at not just one debt, like medical school student loans, but at your family’s full financial picture.
The Collaborative Advantage for Doctors Going Through Divorce
The Collaborative Divorce process allows you to take a holistic view of your financial situation and work together in a private setting to reach a solution that is fair for both you and your spouse. Each of you have your own separate lawyers for independent legal advice, and the Collaborative lawyers are restrained from fighting in court, so all of their focus is on reaching a resolution. Unlike in a traditional divorce, where a judge makes the final decision, you and your spouse retain control over the outcome in a Collaborative Divorce. This can lead to more creative solutions, less stress, and a better relationship moving forward—especially important if you have children together. Further, a Collaborative Neutral Financial Professional can help provide options for dividing your marital assets and debts that take into account tax consequences, medical practice business valuations, future cashflow projections, and/or asset allocations. (Learn how a Neutral Collaborative Facilitator can also help).
Conclusion
Navigating medical school student loans in a Florida divorce can be challenging, but it doesn’t have to be a battle. By choosing the Collaborative Divorce process, you and your spouse can work together to find a fair and equitable solution that takes into account your unique circumstances. This approach not only helps you resolve financial issues but also sets the stage for a more amicable and respectful post-divorce relationship. Remember, you’re not just dividing debts; you’re shaping your future. Find out more by clicking the button below.
Adam B. Cordover has co-authored a book on Collaborative Family Law published by the American Bar Association and is a member of the Board of the International Academy of Collaborative Professionals. Adam received the inaugural Visionary Award from the Florida Academy of Collaborative Professionals and has travelled the globe teaching professionals, judges, and the public about Collaborative Practice. Family Diplomacy represents clients virtually throughout the State of Florida and has offices in Tampa, St. Petersburg, and Sarasota.
