My Former Spouse Paid Off My Student Loans – Do I Have to Pay Him Back?
June 4, 2019 By: Ira Marcovitch Read Time: 3 minutes
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Read as Associate lawyer Ira Marcovitch answers the following question of student loan repayment after divorce:

Before my husband and I married, I had been attending university. I convocated in May 2003 and my OSAP loans of $30,000 had to start being paid off in November 2003. We married in August 2003.My husband inherited money in Summer of 2003 and gave me the money to pay off my loans after we were married. There was no contract, he gave me the money freely. Now in divorce, he wants the $30,000 back. Do I have any legal standing to avoid paying out that much money in the divorce?

When married spouses separate or divorce, they are entitled to an equalization of net family properties.

When married spouses separate or divorce, they are entitled to an equalization of net family properties. In other words, this means that married spouses are entitled to share in the growth of their individual net worth over the course of the relationship (their net family property or “NFP”). It is also important to note that spouses are entitled to an equalization of the values of their family properties, not the property itself. Equalization is satisfied by a transfer of money, not the property itself. As well, there are certain categories of property that are excluded from the NFP calculation and are enumerated in s.4(2) of the Family Law Act.

In most cases ‘the relationship’ for equalization purposes is the time between when spouses marry, and when they separated with no reasonable chance of reconciliation However, there are cases when different dates are used, and there may even be a dispute as to the date that spouses began to cohabit and the date that they separated. In cases of matrimonial property, it is always best to consult an experienced family law lawyer as these claims are complicated and very fact-driven. A good lawyer will help you put your best foot forward to help maximize an equalization entitlement or minimize an equalization obligation.

Because what is being equalized is the net growth in your family property, each spouse will have to determine the value of assets and liabilities they had both on the date of cohabitation or marriage (whichever is earlier) and on the date of separation. Each spouse will then deduct the net value of the former from the latter to arrive at their net family property. The spouse with the higher NFP will then pay one-half the difference between the spouses’ NFP as the equalization payment.

In your case, you had a $30,000.00 debt outstanding on the date of marriage. Because this debt no longer existed on the date of separation, your net worth during marriage period rose by at least that $30,000.00. With regards to the source of the funds, inheritances received during the marriage are excluded from the NFP calculation – they are not considered part of the net growth. However, since it was received before the marriage, the exclusion does not apply. However, your husband will most likely be able to claim a $30,000.00 deduction from his NFP as this was an asset that he brought into the marriage.

However, the above does not mean that you will owe him $30,000.00 for the money he gave you. What matters is what your net family property is after all the calculations have been done as these will consider the OSAP loan and its payment as well as the transfer to you of the $30,000.00. If it turns out that your spouse has a greater NFP than you do, then he will have to pay you an equalization, regardless of where the $30,000.00 came from and went.

Determining net family property and resolving issues regarding marital property are complicated and depend heavily on the specific facts of your case. It is always recommended you speak with a family law lawyer who has experience litigating these claims. Talking to a family lawyer early will ensure that you do not make any mistakes along the way, mistakes that can cost you a lot of time and money.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2019 Nelligan O’Brien Payne LLP.

Service: Divorce

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