How to Get Out of a Co-signed Student Loan in Divorce

Your divorce settlement has no bearing on your responsibility to your creditors.
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When you co-sign for a loan, you are telling the lending bank that you assume all liability to make payments on the loan if the person for whom you are co-signing fails to make timely payments. A co-signer with a good credit history can allow a person with less than stellar or limited credit to receive a loan for which he otherwise wouldn't qualify. If you co-signed for your spouse's student loan and you are now getting divorced, the lender will not likely remove you as a co-signer on the loan, as you and your good credit are the lender's security for the loan.

Refinancing Student Loan Debt

The most viable option for getting your name removed as co-signer on the student loan would be for your spouse to refinance the student loan debt on his own. If, during the time of your marriage, your spouse's credit has significantly improved, he may be able to secure a loan without a co-signer to repay the original student loan debt, thus satisfying the original loan and ending your liability. If your soon-to-be ex is still in school and not paying on the loans, this may not be an option.

Putting Terms in Your Divorce Settlement

As part of the divorce process, each spouse is required to fully divulge all financial matters to her attorney. Your attorney should have language included in any divorce settlement stating that all of your spouse's student loan debt is her responsibility to pay. This way, if your spouse fails to meet her obligations after the divorce is final, you can take her to court and ask the court to intervene on your behalf.

Watching Your Credit Report

If your spouse fails to live up to the agreed obligation to pay the student loans on time, the lender may contact you or withdraw payments directly from your bank account. If the lender cannot contact you in such an event, it might make entries into your credit report showing a delinquency on your ex-spouse's student loans. Signing up for a credit monitoring service will allow you to know quickly when your credit report changes. Any negative entries due to your spouse's lack of payment on the student loans would give you reason to take him back to court.

Protecting Your Identity

Your former spouse will likely have much of your personal information -- the type that's needed to secure credit -- such as your Social Security number, date of birth and bank records. If your divorce becomes contentious, you should take steps to protect your identity should your ex-spouse feel any need to hurt your credit. Contacting your banks and asking that your account numbers be changed, as well as changing your account passwords, are the first steps to protecting your financial house if you are concerned about a breach. You can also contact the credit bureaus and place a fraud alert on your credit reports to prevent unauthorized accounts from being opened.

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