Understanding Partner’s Debt Before Marriage

Tying the knot need not necessarily mean sharing the ownership of debts.

The meaning of marriage differs from individual to individual for some it is an emotional bonding, a merging of financial aspects while for others it means creating a household budget combining individual and joint expenses or even sharing savings and checking accounts. Nevertheless, the question everybody may think of is if you marry someone with debt does it become yours? Understanding how debt affects the financial status after marriage is very important.

Who’s In Charge of Debts?

It is quite common for people to have debts and when two people decide to get married it only means they agree to clear their debts in the best interest of the family. Debt can arise even after marriage but the one that comes as baggage before that might not be the responsibility of your partner no matter how big or small the debt is.

The exception however is if either of you knew each other’s financial status then it can be a mutual effort to work towards clearing the debt. The decision to open a joint account would make you both equally liable for the balance.

Handling The Debts Post-Marriage

The rules of debt liability change once you’re married and it depends on co-signing a debt or opening a joint credit account with your partner for which you would share responsibility.

Sharing the responsibility equally is based on where you live and whether you and your partner are liable for a debt that’s in only one of your names after marriage. If you reside in a community property state then most debts incurred after marriage may be treated as belonging to both the partners.

The following states have community property laws:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

Consequences Of Shared Debt

Sharing a debt is good but the problem arises when it goes unpaid and that is where the whole problem of your marriage financial woes begin.

1. If you’ve opened a joint account or co-signed a debt – delayed payments can have a negative impact on credit scores and reports and you might face the brunt for an outstanding debt, irrespective of your location whether you live in a common-law state or community property.

2. If a debt is held by just one partner in a community property state – Creditors may direct you to attach jointly held assets to recover what is owed which includes bank accounts and properties you own, such as land, home, or vehicle. In spite of your unawareness of the debt, you can be held responsible for repaying the same if your spouse defaults.3. Getting a divorce in a community property state – as mentioned earlier the debts you had before the marriage would remain your own. But, debts, added after the marriage could be divided equally between you and your spouse depending on the divorce laws in your state. However, in common law states, the court has the authority to decide how marital debts should be split.

Think Twice About Debt Before Marriage

Talking well in advance before entering into wedlock can do a world of good by averting something that you are not ready to accept, interpret, or digest. Your financial situation can either sound alarming to your fiancée, or not so serious in comparison and that is where the first crisis lies.

Once that is sorted, it becomes necessary to understand the combined debts as a couple and the responsibility on the same. Whether it is of your interest to clear the debts constructively is a separate issue altogether but it’s an opportunity to decide on the debt repayment strategy as well.

If There Is No Price To Be Paid, It Is Also Not Of Value

For instance, if you are debt-free and the partner has some to pay off or the other way around then discuss if that shall be cleared through the joint household budget. If your partner is fine with repaying your debts it solves the problem but, if not, be prepared. Remember to have regular conversations with your spouse as marriages can lead to new debts and additional responsibilities. A more sensible method as a couple is to handle the joint household budget by taking help in the form of an emergency fund because that way the focus can be directly on clearing debts and not on petty daily expenses that can affect your marriage lives while influencing the decisions as well.

By Karthick V