When you said “yes,” you didn’t know you might have agreed to take on your partner’s credit card debt as well. How these financial obligations are handled legally after marriage depends on several factors, including where you live, whether you hold a joint account, and fees.
Although a lender or debt collector cannot personally pursue you for payment, large balances can affect both of you when you live together.
Here’s when you could be married to your spouse’s credit card debt and how you can ease the problems before and after you walk down the aisle.
Do you inherit debt when you get married?
First, the good news: credit card debt your spouse incurred before marriage is not transferred to you, in whole or in part. It remains the financial and legal responsibility of the person who introduced it into the marriage.
If that person’s debt were to remain unpaid, your assets would be protected against collections. On the other hand, if your spouse incurs a debt during your marriage, you can be held liable, whether or not you opened an account or were aware of it.
Debt can fall on both of your shoulders if you live in a state with community property laws, says Leslie Tayne, a New York-based financial attorney who specializes in consumer credit issues.
“If you don’t have a prenuptial agreement, debt incurred after you get married is usually shared if you live in a community property state,” Tayne says. “If you get divorced, debts incurred together after marriage will usually be split, which is why it’s so important to be on the same page and avoid unpleasant surprises later.”
The nine community-owned states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska, Florida, Kentucky, South Dakota, or Tennessee, spouses can join the community property system or designate certain assets as community property.
All other states use the common law system of land ownership. As in a community property state, you will not be liable for any debts your spouse accrued before marriage.
However, separate debts incurred during the marriage will not be shared if you divorce, unless the charges benefited you when you were married. For example, if your spouse used a credit card to pay for essential expenses such as housing, food, clothing, and childcare, you may still have to pay, even if you didn’t make the costs.
Both of you will be responsible for the debts on the joint accounts, regardless of where you live.
What can happen if a shared debt remains unpaid?
A shared debt needs to be paid, even if your relationship isn’t working out.
If the marriage dissolves and your ex defaults, creditors may have the right to demand payment from you. This goes for bills your ex was charged to pay, according to the divorce decree.
A judge in a divorce proceeding can split shared debts, but that doesn’t mean your spouse will pay them, Tayne says.
“Your creditors don’t care who is named liable for a debt in a divorce or separation agreement, only that they get paid,” she says, “and they will go after those who are guarantors. debt”.
For this reason, keeping up to date with mutual accounts is a good idea. If your ex-spouse begins to miss payments, then this is your cue to reach out and consider possible remedies.
Is Your Spouse’s Debt Affecting Your Credit Score?
Your spouse’s credit rating and credit history do not directly affect yours.
“You and your spouse will continue to have two separate credit histories and scores,” Tayne says. “If one person has credit issues, the good news is that it won’t affect the other partner’s credit reports or credit scores.”
But a joint account or an account where you are an authorized user or co-signer will appear on your credit report. What is the difference?
Joint account holders: You and your spouse are considered equal on the account. If someone runs up a large balance and doesn’t pay the bill, both cardholders suffer the consequences. This could include a hit to both of your credit ratings or the account sent to collections.
Authorized users: One spouse gets permission to use the other’s card account and gets the account’s positive payment history, but is not responsible for the bill. This can help your spouse build or rebuild their credit. You can remove yourself as an authorized user if the account is not well managed.
Co-signers: If you are a co-signer of a debt from a spouse, such as a loan, it will show up on your credit report. A cosigner agrees to be legally responsible for paying a debt if the borrower fails to pay as agreed.
Even if you’re not responsible for your spouse’s debt and it’s not on your credit report, your spouse’s credit issues can still affect you when you want to get a loan or line of credit together. . Lenders will analyze both your credit history and scores to determine qualification and set terms. If your spouse’s debt is dragging you down, consider applying with your own credit and financial information.
Who is responsible for the debt if your spouse dies?
A creditor might look to you if you live in a community property state, or have joint accounts or co-signed a loan, according to Tayne.
“Joint account holders will have a liability for the debt, but authorized users will not,” she says. “Automobile and mortgage payments must be made after the death of a spouse, so the surviving person may be held responsible for making these payments to avoid asset repossession. Most others debts, such as credit card debt and student loan debt, will be borne by the estate of the deceased.”
If the debts are not satisfied, they can affect the amount you receive as an inheritance because these obligations are paid before the money is distributed.
How to Discuss Debt Before Getting Married
If the thought of splitting debt makes your heart flutter — and not romantically — start talking, preferably long before you shop, says California-based licensed marriage and family therapist Tracy Bagatelle-Black.
“People tend not to want to talk about money,” Bagatelle-Black says. “But you should start when the relationship gets serious. You need to be financially compatible or the marriage will be troubled. There’s a lot of shame about debt, so it’s best to come clean early.”
Arrange dates where you can cover the wide range of financial topics, from budgets to credit products to goals, says Bagatelle-Black. You must learn what money means to each of you.
“Some people think it buys fun, some people think it buys safety,” she says. “One can be a spender, the other a saver.”
Dive into the topics and discuss your answers to questions such as:
- Where and how do you like to spend your money?
- What do you think of consumer debt? Does it make you nervous or comfortable?
- How much debt do you each owe and what are your repayment plans?
- If your partner gets into debt, will you help them pay it back to achieve common goals, like home ownership?
- Are you organized and do you always pay your bills on time? Or are you random and missing payments?
- Do you want to share credit cards or do you prefer to keep all accounts separate?
- Should we inform each other before making a big load? What number would trigger a check-in?
Honesty is vital, says Bagatelle-Black. If either of you is hesitant to be honest, a few sessions with a couples counselor may be necessary. After all, this is your chance to identify red flags, such as a buying compulsion that can wreak havoc down the line.
Discussions about finances should not end after the wedding, but should continue regularly. Unresolved money issues are the best predictor of divorce, says Bagatelle-Black. Work them with frequent talk and you can increase your chances of marital success.