The earlier you discuss finances with your partner, the better you can plan for a future together.
Ah, marriage. That time in life when compromise becomes inevitable. You can debate anything from what to eat for dinner to whether or not $3,000 is too much to spend on a Super Bowl ticket. Marriage unites every aspect of two lives, including your finances. So, what happens when one partner enters the marriage carrying a boatload of debt?.
Getting married is a beautiful and exciting time in your life. However it’s also important to be realistic about the financial implications of merging your lives with another person. One of the biggest concerns for many couples is whether they will be responsible for their spouse’s debt after they get married.
The answer to this question is not always straightforward and depends on several factors, including:
- The state in which you live: Some states have community property laws, which means that any debt incurred after marriage is considered to be the responsibility of both spouses. Other states have common law, which means that each spouse is only responsible for the debt they incurred before or after marriage.
- Whether you co-signed on any loans: If you co-signed on a loan for your spouse, you are legally obligated to repay that debt even if your spouse defaults.
- Whether you have joint accounts: If you have joint accounts with your spouse, you are both responsible for any debt incurred on those accounts.
Here’s a breakdown of how debt is handled in different situations:
Before Marriage:
- Debt incurred by each spouse before marriage is their own responsibility. This includes student loans, credit card debt, and personal loans.
- If you co-sign on a loan for your spouse, you are legally obligated to repay that debt even if your spouse defaults.
- If you have joint accounts with your spouse, you are both responsible for any debt incurred on those accounts.
After Marriage:
- In community property states, any debt incurred after marriage is considered to be the responsibility of both spouses. This includes credit card debt, personal loans, and auto loans.
- In common law states, each spouse is only responsible for the debt they incurred before or after marriage. However, there are some exceptions. For example, if one spouse uses a credit card to pay for family expenses, the other spouse may be held responsible for that debt.
- If you co-sign on a loan for your spouse, you are legally obligated to repay that debt even if your spouse defaults.
- If you have joint accounts with your spouse, you are both responsible for any debt incurred on those accounts.
Here are some additional things to keep in mind:
- Even if you are not legally responsible for your spouse’s debt, it can still impact your credit score. If your spouse has a lot of debt, it could make it difficult for you to qualify for a loan or mortgage.
- It is important to talk to your spouse about their debt before you get married. This will help you to understand their financial situation and to make informed decisions about how to manage your finances together.
- You may want to consider getting a prenuptial agreement. This is a legal document that can help to protect your assets in the event of a divorce.
The following resources will assist you in learning more about debt and marriage:
- Experian: When You Get Married, Do You Share Debt?
- The Balance: Does Marriage Make You Responsible for Your Partner’s Debt?
- National Foundation for Credit Counseling: Debt and Your Marriage
Remember, it is important to be open and honest with your spouse about your finances. By working together, you can create a plan to manage your debt and build a strong financial future together.
Does your spouse’s debt become yours?
Lets say youve never been comfortable with debt. When buying a car, you buy a used one to pay it off quickly. In order to avoid being stuck with high-interest debt, you pay off your credit card in full before the end of the billing cycle when you use it to cover an expense. In short, youve deliberately chosen to save and invest rather than borrow money to make purchases.
Lets also assume that its your partner carrying the aforementioned boatload of debt. It’s enough to make your hair stand on end how much they owe on their credit cards alone. We have good news if the thought of taking on that debt is enough to make you break out in hives.
Any debt in your spouses name alone is theirs and theirs alone. You dont take it on just because youre married and you are not responsible for paying it back. And getting married changes nothing for your spouse. Theyre still responsible for making payments.
Takeaway: Marriage does not make you responsible for the debt in your spouses name only.
Any debt solely in your partners name will not impact your credit score. Maybe your spouse is in over their head and skips a few monthly payments. Alternatively, if they’re paying their bills on schedule but have used up all of their credit, their credit score suffers. The good news is that their financial behavior does not bleed over into your credit report.
The bad news is that your spouse’s credit problems may still affect you even if your credit report is perfect. Say both of you are in excellent jobs, that mortgage rates are going down, and you decide it’s time to purchase your first house. In order to avoid having the mortgage lender consider both of your credit histories, including any debt your spouse brought into the marriage, you must be earning enough money to be eligible for a loan on your own.
Your spouse appears on your credit report as a “financial associate” if you and your spouse jointly take out any credit, such as a joint credit card or auto loan. Before approving a loan application, creditors may wish to review both of your credit reports if you become financial associates.
You receive an excellent offer for a fee-free credit card with a low introductory interest rate. You apply for the card, but the issuer runs a credit check on you and your spouse. Your application may be denied or the card issuer may offer you a card with a higher interest rate based on your spouse’s credit score.
If your spouse is deeply in debt, you may have two problems: either their debt-to-income (DTI) ratio is too high for comfort, and reliable lenders won’t take a chance, or their credit score is too low to qualify for new credit.
Takeaway: If you’re getting married to someone who has a lot of debt, collaborate to come up with a strategy to pay it off as soon as possible.
Any debt in both of your names belongs to each of you. You are both responsible for repaying any loans you take out together for anything from a late honeymoon to new furniture.
Takeaway: Only sign a joint loan application with someone after digging into their financial situation. Being too embarrassed to find out about their credit history may come back to bite you.
Your situation will be different if you live in one of these nine states.
Like any other state, youre not responsible for a debt your spouse incurred before you were married. Even if you didn’t sign on as a joint account holder, you are still partially responsible for any obligations your spouse takes on after the wedding.
If youre marrying someone who loves to spend, be aware that their new debt becomes your shared responsibility. Your joint assets may be taken by a creditor to satisfy the debt if your spouse doesn’t make payments.
Takeaway: By having a formal premarital agreement created, you can formally opt out of the community property system if you’re worried about your marriage accruing debt.
In addition to being sensible from a practical standpoint, getting in sync with your finances could be the first step toward creating a more enjoyable life together.
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- Before getting married, a partner’s debt does not transfer to the new spouse.
- Even though they do not have a joint account, couples who live in states where community property exists are nonetheless accountable for any debt their spouse accrues after marriage.
- Both partners are responsible for jointly held debt.
The earlier you discuss finances with your partner, the better you can plan for a future together.
Ah, marriage. That time in life when compromise becomes inevitable. You can debate anything from what to eat for dinner to whether or not $3,000 is too much to spend on a Super Bowl ticket. Marriage unites every aspect of two lives, including your finances. So, what happens when one partner enters the marriage carrying a boatload of debt?.
Is Debt Shared If You Get Married? (Explained)
FAQ
Do you acquire someone’s debt if you marry them?
What happens if you marry someone with bad debt?
Am I legally responsible for my spouse’s debt?
Does your spouse inherit your debt?
Are spouses responsible for debt after marriage?
But after the wedding, things change depending on your state’s laws. Common law states keep most new debts made after marriage separate, though community property law states view both spouses as equally responsible, even if it’s only in your spouse’s name. Am I Responsible for My Spouse’s Debt?
What if my spouse doesn’t pay my debt after marriage?
If you cosigned on the debt, however, and your spouse doesn’t pay, you are legally required to repay that debt even after marriage. The only times you would be responsible for debt your spouse incurred before marriage would be if, after marriage, you sign on to be a joint account holder or you co-borrow a loan.
Should you marry someone with debt?
In fact, your future spouse has quite a bit of debt. Marriage is about making it work for better or worse, but it doesn’t seem fair that exchanging vows could unravel all your hard work. Fortunately, it doesn’t have to. Here’s what you should know about protecting your finances when marrying someone with debt.
When does a debt become a joint debt if you get married?
Because the key is “during the marriage,” it matters when the debt was incurred. For instance, if your spouse incurred a credit card debt while single, it won’t automatically become a joint debt if you get married.