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Parental liability as co-signers on kids’ school loans subject to divorce decree

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Student loan liabilities of parents who co-signed for their two children should have been a consideration in dividing property in a divorce proceeding, the Indiana Court of Appeals ruled Thursday.

The panel affirmed in other respects the ruling from the court of Marion Superior Judge David Dreyer, but remanded John Luttrell v. Melinda Luttrell, 49A02-1301-DR-85, to consider the student loans.

“While there is little relevant Indiana case law regarding disposition of contingent liability in divorce proceedings, we believe the loans should have been considered by the trial court,” Chief Judge Margret Robb wrote for the panel that included Judges James Kirsch and Patricia Riley.

The court cited In re Marriage of Lay, 512 N.E.2d 1120, 1123-24 (Ind. Ct. App. 1987) that established the court may not divide assets or liabilities that don’t exist, but said that should not be the case for liabilities in which the parents have guaranteed payment in the event of a default.

“While it is possible that neither John nor Melinda will be called upon to make good on their promise to repay the loans, at the same time, their names cannot be removed from the loans,” Robb wrote. “If one of the children defaults, the co-signers will be liable on the debt. We remand to the trial court for consideration of the Luttrells’ liability under the children’s student loans.”


 

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  1. Based on several recent Indy Star articles, I would agree that being a case worker would be really hard. You would see the worst of humanity on a daily basis; and when things go wrong guess who gets blamed??!! Not biological parent!! Best of luck to those who entered that line of work.

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  4. Law school is social control the goal to produce a social product. As such it began after the Revolution and has nearly ruined us to this day: "“Scarcely any political question arises in the United States which is not resolved, sooner or later, into a judicial question. Hence all parties are obliged to borrow, in their daily controversies, the ideas, and even the language, peculiar to judicial proceedings. As most public men [i.e., politicians] are, or have been, legal practitioners, they introduce the customs and technicalities of their profession into the management of public affairs. The jury extends this habitude to all classes. The language of the law thus becomes, in some measure, a vulgar tongue; the spirit of the law, which is produced in the schools and courts of justice, gradually penetrates beyond their walls into the bosom of society, where it descends to the lowest classes, so that at last the whole people contract the habits and the tastes of the judicial magistrate.” ? Alexis de Tocqueville, Democracy in America

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