in Texas Premarital Student Loans, Post Marital Refinance/Consolidation

[jlawdubs]

In Texas, a community property state, if my soon to be spouse, has $100k student loans she acquired before I even knew her...and decides to refinance or consolidate that student loan(s) after our marriage, does that refinance/consolidation constitute a new debt? Will I be on the hook for the new loan, even if it was taken to pay off a pre existing student loan debt? I have a great credit record, my fiance doesn't.

thank you for your advice.

 

[LdiJ]

In Texas, a community property state, if my soon to be spouse, has $100k student loans she acquired before I even knew her...and decides to refinance or consolidate that student loan(s) after our marriage, does that refinance/consolidation constitute a new debt? Will I be on the hook for the new loan, even if it was taken to pay off a pre existing student loan debt? I have a great credit record, my fiance doesn't.

thank you for your advice.

You will be if you sign off on the refi. As long as it has nothing to do with you, you should be able to prove that its premarital debt even if refinanced.

 

[HRZ]

IF you are 100% never in equation then it's likely her creditors have no access to your separate property ....but if she fails to pay her debts , if married , your credit may go into sewer.....so,it makes,sense that she pay her bills and also not drain community resources to pay her separate bills while,you are left,to,pay,all,the remaining his, her and our bills....and don't ignore some lopsided impacts if the marriage hits the rocks ..you are unlikely to get any credit if you paid off some of her debts .

Personally I suspect it's darn hard if married to get her debt refinanced at a more favorable rate and keep you 100% out of equation..she can try and or get it refinanced before she is married . ....

 

[LdiJ]

IF you are 100% never in equation then it's likely her creditors have no access to your separate property ....but if she fails to pay her debts , if married , your credit may go into sewer.....so,it makes,sense that she pay her bills and also not drain community resources to pay her separate bills while,you are left,to,pay,all,the remaining his, her and our bills....and don't ignore some lopsided impacts if the marriage hits the rocks ..you are unlikely to get any credit if you paid off some of her debts .

Personally I suspect it's darn hard if married to get her debt refinanced at a more favorable rate and keep you 100% out of equation..she can try and or get it refinanced before she is married . ....

Premarital debt is separate debt. Her credit is not going to impact his credit in regards to separate debt.

 

[jlawdubs]

Premarital debt is separate debt. Her credit is not going to impact his credit in regards to separate debt.

What I'm concerned about is, if she defaults on the new loan (refinanced/consolidated old student loans), can I be held liable? Texas is community property state...all assets and debts shared...I'm worried that even though this "new" loan is for "old" premarital debts...it can be seen as shared debt, because it was refinanced/consolidated after we are married.

 

[LdiJ]

What I'm concerned about is, if she defaults on the new loan (refinanced/consolidated old student loans), can I be held liable? Texas is community property state...all assets and debts shared...I'm worried that even though this "new" loan is for "old" premarital debts...it can be seen as shared debt, because it was refinanced/consolidated after we are married.

I do not believe that a refinance can change the nature of debt from premarital to marital.

 

[HRZ]

not if she keeps things 100% separate....

 

[latigo]

What I'm concerned about is, if she defaults on the new loan (refinanced/consolidated old student loans), can I be held liable? Texas is community property state...all assets and debts shared...I'm worried that even though this "new" loan is for "old" premarital debts...it can be seen as shared debt, because it was refinanced/consolidated after we are married.

It isn't complicated!

Unless you wish to be personally responsible for the debt, then don't sign anything agreeing to be held responsible. Marriage alone won't subject you to liability for her separate debts. Nor will a refinance during marriage per se affect the character of the debt.

What you might be concerned over is this. Suppose that after the marriage the loan goes into default. That is a big hunk of change. The question is: Under Texas law could the lender attach and levy against community property? Understanding that community property would comprise any property acquired during the marriage by the efforts of either spouse.

Arizona says no. Community property is not liable for a spouse' separate debts. (See: Forsythe v. Paschal 34 Ariz. 380, 271 P. 865 (Ariz. 1928). *

What does Texas say? I don't know. Have looked briefly, but don't know. But if I was about to marry someone owing that much money, I would like to know how safe my future income will be. And I'd like the opinion of someone in a position of education and experience to know, meaning you will need to pay to learn.

____________________


[*] Noting that the logic applied in reaching the decision in Forsyth seems a bit suspect. What it did is to assume that when the Arizona legislature enacted a law holding that a spouse's separate property was not liable for the separate debts of the other spouse, it included the community estate as well as separate property. And ignored the legal maxim in statutory construction that when a legislative body specifies one thing clearly, a court must assume that all other things are excluded. (Expressio uniu est exclusio alterius.)

Moreover, since a spouse has a vested interest in one half of the community estate, why should the whole of it be immune from their creditors? As R. P. McMurphy said to the Doc in "One Flew Over the Cuckoo's Nest", "Makes no sense to me."