Student Loans and Marriage: Go Together Like a Horse and Carriage

ASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

horse & carriageDear Leon,

Can creditors garnish my spouse’s wages for my defaulted private student loans? I live in California.

Liz

Dear Liz,

The answer is yes. Your student loan creditors can garnish your spouse’s wages to recover the amount of your defaulted student loan. You don’t mention whether the loan was incurred before or after marriage. Unfortunately, it doesn’t matter. Either way, the creditors can collect, but for different reasons.

Although the explanation won’t make you any happier, at least you will understand why it works this way.

(To learn about ways to manage student loan debt, get information about federal flexible repayment plans, and find out what happens if you default, visit Nolo’s Student Loan Debt area.)

If You Incurred Student Loan Debt Before Your Marriage

I will begin by assuming the debt was incurred prior to marriage.

A Primer on Community Property Law 

California is what we call a community property state. Community property is a special term used to define how property rights and financial liabilities are assigned between spouses. In a community property state, property that each of you had prior to marriage remains your separate property. Debts that each of you had prior to marriage remain your separate debts. Any assets and debts acquired by either spouse during marriage are normally assigned to the community, that is, to both spouses regardless of who brought it in (there are some exceptions, but those would not apply here).

That brings us to the justification for the garnishment of your spouse’s wages for your separate pre-marital debt. Your spouse does not “inherit” your debt. But under the definition of community property, half of your spouse’s wages belong to you. So the student loan creditor can garnish the part of your spouse’s wages that belong to you under the community property laws.

(To  learn more, see Nolo’s article Debt and Marriage: When Do I Owe My Spouse’s Debts?)

Enter the Prenuptial Agreement

All of this explains why some couples opt for a prenuptial agreement. They wish to be a married couple, but for their own reasons they don’t want to share their post nuptial income equally with each other.

I assume you did not have a prenuptial agreement. You might go to a divorce lawyer and look into the feasibility and enforceability of entering into a post nuptial agreement. A post nuptial agreement might do the same thing to protect your spouse’s income as a prenup might have done. The completion of either a divorce or a legal separation agreement might also protect your spouse’s wages from your student loan garnishment.

A word of caution: Marital agreements don’t always hold up in court. I can imagine a creditor complaining that a post-nup be invalidated as a fraudulent transfer.

(Learn more about prenuptial agreements.)

If You Incurred the Student Loan Debt During Marriage

Finally, what if the student loan had been made during the marriage?  The creditor could still garnish your spouse’s wages, because the wages are community property. Moreover, spouses are normally liable for each other’s debts that are incurred during the marriage. It usually makes no difference that the promissory note for the student loan was never signed by your spouse.

Comedian Red Skelton, who often joked about marriage, once said, “I love my wife. We always hold hands. If I let go, she shops.”

Red must have lived in a community property state.

Sincerely,

– Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

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