During a divorce, couples in Illinois will need to negotiate the division of assets and their debts. Dividing debts might be challenging, particularly if the spouses had consolidated their student loans into a joint spousal consolidation student loan. In the past, it was impossible to divide this loan if the couple’s marriage ended, but the law has changed, and couples will now be able to legally split this loan.
Why did some couples consolidate their student loans?
Consolidating student loans might have seemed like a good idea to spouses who wanted to streamline their finances. Instead of having to make several payments a month, couples who opted for a joint spousal consolidation student loan needed to make only one payment. Additionally, the consolidation loan provided a better interest rate for repayment. However, there were also some drawbacks, such as risking having a higher payment amount and potentially losing out on some benefits since meeting requirements became harder when both spouses had to do it.
Why would divorcing couples want to split their consolidation loan?
During a divorce, spouses are often seeking a clean break from each other. This might include having a clear division of not just their assets but also their debts. Splitting a joint spousal consolidation student loan can provide couples with several benefits, including:
• Ability to keep the lower interest rate of the consolidation loan
• Responsibility for just the percentage of debt owed that correlates to their individual original loans
• Opportunity to apply jointly for the separation of the loan or individually if there is domestic or financial abuse in the marriage or if the ex-spouse cannot be found
• Chance to start over but in control of their own finances
Dividing consolidated student loans can bring peace of mind since there is no worry that your former spouse is not meeting their responsibility to pay. This is important when you are beginning your new single life.