One of the most important relationship questions couples face before they marry – How much debt do you have? — often isn’t asked, but might serve as a commitment speed bump, if given the chance.
If it sounds far too cold and transactional to ask a romantic partner how many credit cards they have and how much they owe, well, real life isn’t a Hallmark movie.
Fact is, debt is almost assuredly going to become “the significant other” in most marriages, a constant companion that many couples wish they could live without but can’t.
That’s why it is important that both sides know that married or not, if you signed your name to a credit card account or loan agreement, you are responsible for that debt.
Do You Inherit Your Spouse’s Debt When You Get Married?
Taking marital vows does not mean you take on your partner’s debts.
“If one spouse comes into the marriage with debt, that debt is theirs alone,” Derek Jacques, a family attorney in Detroit, said.
In simple terms, if you didn’t sign up for the credit card or loan agreement, you do not inherit your partner’s debt. Jacques uses the example of student loans, a common tag-along in many young marriages. Just like credit card debt, your partner’s student loan debt is theirs and theirs alone if he or she took out the loan while still a single person.
But what if after you’re married, your husband or wife takes out a student loan to get a graduate degree?
“That is a different story,” Jacques said. “That debt is now joint, and (depending on the state) would be the responsibility of both spouses.
“In common law states, the spouse would NOT end up being responsible, as student loan debt truly only benefits one party,” Jacques said. “If the debt were something that benefitted both spouses, then both would be equally responsible. In community property states, the spouse could be held responsible for the debt.”
Does Your Spouse’s Debt Impact Your Credit Score?
Your spouse’s debt before the marriage does not impact your credit score, at least not directly. However, once you marry and agree to a joint credit card account, or an account where you were added as an authorized user, it will impact your credit score.
Perhaps more importantly, how your spouse manages debt can affect your credit score. If, for instance, their credit card balance becomes unwieldy and affects a couple’s ability to pay household bills and other debt such as a jointly held car loan or mortgage payment, your score will suffer.
Just as paying a joint credit card on time and keeping a low balance would benefit both credit scores, not doing so would cause your score to drop.
“When this happens, your overall debt-to-income ratio will increase,” Brian Greenberg, CEO and Founder at Insurist, said. ”A higher ratio means that you have more debt than income and that can make it hard to get new credit or even keep your existing accounts open.
“In addition to being more difficult to obtain new credit, having more overall debt also increases the likelihood of defaulting on any joint loans or obligations because there are now more bills to pay each month than before.”
Community Property States
In community property states, spouses are considered joint owners of all assets and debts acquired in a marriage:
The nine community property states are:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- Texas
- Washington
- New Mexico
- Wisconsin
Three states, Alaska, South Dakota, and Tennessee, are opt-in community property states; meaning, couples choose whether to make their assets and debts part of their community of two.
In community property states, everything acquired during the marriage usually is considered equally owned by the spouses. It is the “property” of their amicable “community.”
There are nuances from state to state, but generally speaking anything purchased during the marriage that can be regarded as improving the two-person community qualifies as community property. Accordingly, debt acquired as a result of those purchases – mortgages, auto loans, student loans, credit card debt – also is community property.
A key exception: Debts taken on by one partner that are demonstrably detrimental to the community — gambling debt, for instance — is not shared. Gambling winnings, on the other hand, are community property.
Debt acquired in a “non-marital endeavor,” such as spending on drugs or a lover, is not shared for obvious reasons. At least in these cases, divorce law steers clear of adding insult to injury.
Common Law States
The remaining 38 states operate under a common law property system, which basically stipulates that property one spouse acquires belongs solely to that person unless the property is put in the names of both spouses.
In common law states, you’re responsible only for debts in your name. When you put your name on a joint account, you’re agreeing to share responsibility for paying debts on that account.
Against mountains of evidence, common law states optimistically expect people mature enough to marry also are responsible enough to be savvy about their mutual finances. If your ex charged $39,000 on a Visa card in both your names, you are equally liable for the debt. Also, if you cosign on your spouse’s credit card, you are on the hook for whatever bills are run up on that account.
“Debts that are marital spending – such as food, clothing, vacations – is marital debt that you accrue together,” says Morghan Richardson, matrimonial law partner at Tarter Krinsky & Drogin in New York. “If a spouse has a spending problem, maybe they are running up secret credit card debt on items for the house, and expensive clothing, which could be viewed as marital.”
Regardless of what state you live in, protecting yourself isn’t easy. For one thing, it might threaten your relationship. When couples sit down to figure out their finances, the last thing their love-struck ears want to hear is, “I’m madly in love with you, but I’m worried your spending, so I want separate credit cards and bank accounts.”
But it’s a conversation you simply must have.
Credit Card Debt
There’s just no way around the fact that for better and worse, money, especially credit card debt, affects a marriage. A Fidelity study between 2007-18 showed more than 50% of spouses brought debt into their marriages and 40% said it negatively impacted their relationship.
High interest credit card debt is the biggest culprit of all. If you allow your spouse to use a credit card that is only in your name, you are responsible for the debt.
A friend got married without having a discussion about money. Susan learned shortly after the honeymoon that the man of her dreams had a nightmare credit history: $30,000 in credit card debt.
His debt wasn’t in her name, but she understood the drag it would have on their financial goals as well as their relationship.
She quickly made a budget. They lived on his salary. They put her nursing salary toward paying down credit card debt. Thirty years later, they’re still married, but that is a difficult way to start to any marriage.
Ask financial questions before you take your vows.
Maintaining Separate Accounts
Having an honest discussion about finances and credit history is much more important than picking out the right wedding cake or the reception seating chart. But even the best strategies sometimes get delayed or go unattended.
Maintaining a separate account, at least for personal spending, while keeping a combined account for purely marital or shared expenses, might simplify things and protect each spouse in the long run.
Have separate accounts might be your lighthouse in otherwise stormy seas, says Richardson.
“Everyone needs a certain level of independence, and this should strengthen your relationship, not undermine it,” Richardson said.
Another strategy that is often difficult to talk about is a prenuptial agreement. A prenup could keep income and debts separate and offer each spouse more control in case of divorce.
If you live in a community property state, a prenuptial agreement won’t necessarily protect you against the debts your spouse brings to the marriage, but it will shield you against the debts he or she runs up after the agreement is signed.
Even if you sign an ironclad prenuptial agreement or set up individual accounts, it’s hard to totally disconnect your finances from those of your spouse’s. After all, married couples are ostensibly a team. And teammates are supposed to be able to rely on each other.
How to Discuss Debt and Finances Before Marriage
Waiting to discuss debt concerns until your spouse’s card is denied while paying for your first anniversary dinner isn’t the best way to go about things.
Not because it’s a case of too little too late. There’s time to make a plan. But the best strategy is to talk about finances before marriage.
“Since money is a top source of stress in relationships, I advise couples who are seriously dating — especially young couples — to schedule regular Money Date Nights,” Simi Mandelbaum, founder, and financial counselor at PROSPR Financial Wellness in New Jersey, said. “On those dates, couples can discuss theoretical situations, their upbringing around money, financial thoughts and goals, and anything along those lines. There are even financial games specially made for couples to easily have conversations about money, which I highly encourage.
“Couples who don’t want money to be a stressful topic must fully understand each other’s financial values and goals, so both parties can respect their partner’s way of handling money.”
It’s not an easy discussion but having an outline can keep the conversation from going sideways. Some points you should address while talking about finances before marriage:
- How much debt do you have?
- Do you routinely make only the minimum payment on your credit card debt?
- How much do you owe on your car? Student loans?
- Are you paying off any personal loans?
- How will you budget for vacations?
- Do you want joint bank accounts? Joint credit cards? Why?
- What’s the plan for having children or taking care of aging parents?
- Will having kids allow you both to keep working?
- From which account will you pay monthly bills?
Other issues will arise that you didn’t iron out. In that case, Raymond Hekmat of Beverly Hills-based Hekmat Law and Mediation, advises clients to try couples counseling, or to meet with a joint accountant/wealth advisor to review finances. Getting guidance from an expert can be a marriage-saver.
“Even though there may be concerns regarding debt, the conversation can be about how to grow as a community, invest more, and build wealth for each other and children,” Hekmat said.
If money is tight, consider a nonprofit debt counseling agency. Consultations are free and without obligation, and they can help you achieve everything from sensible budgeting to enrollment in a debt management program that can lower your interest rates and monthly payment on credit card debt.
“Discussing money can actually create intimacy and trust between partners,” Hekmat said. “It is an opportunity to work together toward a common goal, to learn what money means to each other, and to see how money will be dealt with during the marriage.”
Rule No. 1: Don’t spring it on your partner. Make an appointment. Being too casual about it can defeat the purpose.
“Finances do not have a place in the bedroom or in a romantic space,” says Berkeley, California-based credit empowerment coach Mia Love. “There is a time and place for all discussions. You won’t want to mix the two.”
Mortgage and Auto Debt
If your spouse has a low credit score, you won’t get a desirable interest rate if you buy a house or car together. Mortgages are usually so large that — assuming you are relying on both incomes to qualify — applying individually would not work. But with car loans, the partner with the better credit score could apply individually.
Once approved, the other partner can pay his or her share. The only danger is if only your name appears on the documents, your spouse could drive away, and you alone would be liable for repaying the loan.
Debt and Divorce
If you get divorced, it’s important to leave the marriage with no shared debt. Try to pay off joint cards together or divide the debt and transfer it to cards in each partner’s name. Learn more about how debt is divided in a divorce.
For openers, third-party creditors don’t care about any unofficial agreements — that is, promises made to each other about credit card debt in divorce. Wherever you live, if both names are on the account, the credit card company will come after both.
“If you are getting a divorce and are dividing up debts, I would consider talking to your attorney about adding a “hold harmless” clause in your divorce agreement,” Stephen Cawelti, a divorce attorney in Burbank, California, said. “In any separation agreement or divorce document where one spouse is taking responsibility for a debt, it’s important to make sure that if third parties come after the spouse that is no longer responsible for the debt, the one responsible for the debt must pay the costs of the other spouse to fight the creditor.”
That will protect you if your ex-spouse files for bankruptcy or just does not pay what they owe. If you’re not protected, creditors can go after you for the full amount of the debt.
Dealing with Debt After the Death of Your Spouse
The death of a spouse is stressful enough without worrying about creditors attempting to collect debts. Often, credit card debts are forgiven if held in the late spouse’s name alone. But the correct process must be followed.
- Review the spouse’s credit accounts and jointly held debts; you may be grieving, but on-time payments must be made for accounts on which you are included.
- Notify lenders about closing accounts that are held in the late spouse’s name alone.
- For joint accounts, notify creditors that one party on the account is deceased.
Sorting what happens to credit card debt when you die falls to the executor of the late spouse’s estate (if there’s a will) or the court (if no will is in place). Having legal representation is an excellent idea to make sure creditors don’t overreach while going after joint assets such as checking and savings accounts.
Typically, creditors cannot come after the proceeds of life insurance policies, retirement accounts (IRAs and 401[k]s), and brokerage accounts.
However, some situations leave the surviving spouse on the hook, including:
- If the surviving spouse co-signed the debts.
- If the credit card debt is in a joint account between spouses.
- If required by state law.
- If the couple lived in a community property state.
Financial Help for You and Your Spouse
Even couples who made financial discussions part of their relationship before getting married can be knocked off course by any number of life’s challenges: job loss, sickness, education costs, medical bills, death of a spouse or just the expenses of raising a family in inflationary times.
Not everybody has a rich uncle who can float a loan. Debt not only sabotages the best intentions, but it is also the No. 1 stress on a marriage.
Just having a plan you can stick to is an antidote to sleepless nights and tension-filled conversations. If you’ve fallen behind and can’t see your way clear, non-profit debt counseling can provide a budget review, debt analysis and tailored recommendations like a debt management plan for couples. They exist to help by providing financial solvency and, just as importantly, peace of mind.
