Hot Docs: RI high court rules student loans not marital debt; wife solely responsible

May 24, 2012

Family Law Theme MonthStudent loans often create a lot of hardships for families.

In this circumstance, though, the hardship isn’t just because of having to repay the loans.

Instead, they are at the center of a divorce.

In fact, these student loans were the only unresolved issue of the divorce (amazingly, the parties came to an agreement on all other issues in the divorce).

Specifically, the former husband, Steven Palin, claimed that the student loans – taken out during the marriage to finance the kids’ educations – were non-marital debt, and should be allocated completely to the former wife, JoAnne Palin.

JoAnne, naturally, opposed this.

The Supreme Court of Rhode Island just issued a ruling on the case, and sided with Steven.

At first, the ruling doesn’t seem to make any sense, especially to any of you family law practitioners out there.

However, there are a few important factual points to note here.

First, the children here were from a previous marriage of JoAnne’s, though Steven legally adopted them in 1998, two years after he married JoAnne.

Next, Steven testified at trial that the loans were signed by JoAnne without his consent, and that he had no knowledge of the loans until after they had been signed.

In addition, documentary evidence of the loans was never introduced as to whether the loans were actually for the benefit of either of the children.

Hot Doc: Palin v. Palin

Source: Thomson Reuters News & Insight – National Litigation

Conversely, both JoAnne and her daughter Lynn testified that Steven insisted that the children go to college, and that their education be financed in whatever way available – including the parents’ taking out student loans.

These facts probably wouldn’t change anyone’s opinion of the ruling without some laws to apply to them.

First and foremost is Rhode Island’s lack of presumption over whether debts incurred by one spouse during the marriage are marital or non-marital.

Instead, to make this determination, a trial court looks at “all the circumstances surrounding the debt.”

This includes “the purpose of the debt, the receipt of the benefits, the conduct of the parties concerning the debt, the consent or lack thereof by the nonsignatory spouse, and the knowledge of the debt by said spouse at the time the debt was incurred.”

With these factors in mind, the factual testimony from the parties becomes a lot more relevant.

Unfortunately, the evidence of both parties was contradictory, so the trial court had to make a decision on which side’s evidence was more credible.

It sided with Steven, noting that Lynn (his daughter) seemed to have “a lot of animosity” toward her father, and that both Lynn’s and JoAnne’s testimonies were “fraught with bias and prejudice.”

This may have something to do with the “adultery” grounds that JoAnne originally filed her divorce claim on (Rhode Island still has the option of a “fault” divorce).

The Rhode Island Supreme Court gives a lot of deference to trial court findings of credibility of witnesses, so it was very unlikely that it would have overturned the lower court’s decision here.

Considering that the entire case was decided on whom the trial judge found to be more credible, and that JoAnne’s and Lynn’s credibility was hurt by their animosity towards Steven, the case serves as an important reminder about client conduct in family law matters:

As charged as family law issues can get, don’t let emotions impact your side’s actions in legal proceedings.

Doing otherwise will only hurt your case.