When you said “I do,” little did you know that you might also have agreed to take on your partner’s credit card debts. The way these financial obligations are handled legally after nuptials depends on several factors, including where you live, whether you are a joint account holder and what the charges are.
Even if a lender or debt collector can’t pursue you personally for payment, substantial balances can affect both of you once you’re married.
Here’s when you might be wedded to your spouse’s credit card debt and how you can mitigate problems before and after walking down the aisle.
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Do You Inherit Debt When You Get Married?
First, the good news: The credit card debt your spouse acquired before marriage does not transfer to you, partly or wholly. It remains the financial and legal responsibility of the person who brought it into the marriage.
Should that person’s debt go unpaid, your assets would be protected from collections. On the other hand, if your spouse acquires debt during your marriage, you may be liable, whether or not you signed for an account or knew about it.
The debt can fall on both of your shoulders if you live in a state with community property laws on the books, says Leslie Tayne, a financial attorney and founder and managing director of New York’s Tayne Law Group.
“If you didn’t sign a prenuptial agreement, debt incurred after you were married is typically shared if you live in a community property state,” Tayne says. “If you get divorced, debt incurred together after tying the knot will typically be divided, which is why it’s so important to be on the same page together and avoid unpleasant surprises down the road.”
The nine community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In Alaska, Florida, Kentucky, South Dakota or Tennessee, spouses can opt in to the community property system or designate certain assets as community property.
All other states use the common law system of property ownership. As within a community property state, you will not be liable for debt your spouse racked up before the wedding.
However, separate debts incurred during the marriage will not be split if you divorce, unless the charges benefited you when you were married. For example, if your spouse used a credit card to pay for such essentials as housing, food, clothing and child care, you might have to pay, even if you didn’t make the charges.
Both of you will be responsible for debt on joint accounts, regardless of where you live.
What Can Happen if a Shared Debt Goes Unpaid?
A shared debt must be paid, even if your relationship isn’t working out.
If the marriage dissolves and your ex defaults on the debt, creditors may have the right to request that you pay. That goes for accounts your ex was assigned to pay, as per the divorce decree.
A judge in a divorce proceeding can divide 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 of the debt.”
For this reason, keeping abreast of mutual accounts is a good idea. If your former spouse starts missing payments, then that’s your cue to reach out and review possible remedies.
Does Your Spouse’s Debt Affect Your Credit Score?
Your spouse’s credit score and credit report do not directly affect your own.
“You and your spouse will continue to have two separate credit histories and scores,” Tayne says. “If one person has credit problems, 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 a co-signer will appear your credit report. What’s the difference?
Joint account holders: You are your spouse are considered equals on the account. If one person racks up a big balance and fails to pay the bill, both cardholders experience the consequences. That could include a hit to both of your credit scores or the account sent to collections.
Authorized users: One spouse gets permission to use the other’s card account and gains the account’s positive payment history but is not liable for the bill. This can help your spouse build or rebuild credit. You can remove yourself as an authorized user if the account is not managed well.
Co-signers: If you are a co-signer on a spouse’s debt, such as a loan, this will appear on your credit report. A co-signer agrees to be legally responsible for paying a debt if the borrower does not pay as agreed.
Even if you are not liable for your spouse’s debt and it is absent from your credit report, your spouse’s credit woes can still affect you when you want to get a loan or line of credit together. Lenders will analyze both of your credit histories 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.
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Who Is Responsible for Debt if Your Spouse Dies?
In most cases, you will not be responsible for paying off your deceased spouse’s debts. Exceptions vary by state.
A creditor could turn to you if you live in a community property state, or if you have joint accounts or co-signed a loan, according to Tayne.
“Joint account holders will have a commitment for the debt, but authorized users will not,” she says. “Auto and mortgage payments must be made after a spouse’s death, so the surviving individual may be held responsible for making these payments to avoid asset repossession. Most other debt, such as credit card and student loan debt, will be taken care of by the deceased’s estate.”
If debts are not satisfied, they can affect the amount you receive as an inheritance because these obligations are paid before the money is distributed.
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How to Discuss Debt Before Getting Married
If the thought of sharing debt causes your heart to palpitate — and not in a romantic way — start talking, preferably long before ring shopping, says Tracy Bagatelle-Black, a California-based licensed marriage and family therapist.
“People tend to not want to talk about money,” Bagatelle-Black says. “But you should begin when the relationship is getting serious. You have to be compatible financially, or the marriage will be troubled. There is a lot of shame about debt, so it’s best to get everything out in the open early.”
Arrange dates where you can cover the wide spectrum of financial topics, from budgets to credit products to goals, Bagatelle-Black says. You need to learn what money means to each of you.
“Some people feel it buys pleasure; others believe it buys security,” she says. “One may be a spender, the other saver.”
Dive into the subjects, and discuss your answers to questions such as:
— Where and how do you enjoy spending your money?
— How do you feel about consumer debt? Does it make you nervous or comfortable?
— How much debt does each of you owe, and what are your repayment plans?
— If your partner brings debt, will you assist with repayment to achieve common goals, such as homeownership?
— Are you organized, and do you always pay bills on time? Or are you haphazard, and do you miss payments?
— Do you want to share credit cards, or would you prefer to keep all accounts separate?
— Should you inform each other before making a large charge? What figure would trigger a check-in?
Honesty is vital, Bagatelle-Black says. If either of you hesitates to be candid, a few sessions with a couples counselor may be in order. After all, this is your opportunity to identify red flags, such as a shopping compulsion that can create havoc down the line.
Chats about finances shouldn’t end after the wedding but continue regularly. Unresolved money problems are the single best predictor of divorce, Bagatelle-Black says. Work them out with frequent talks, and you can increase your odds of marital success.
Reviewed on June 20, 2023:This article was published at an earlier date.
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