For many couples, getting married means merging different aspects of their individual financial lives. Some couples, for instance, may choose to share checking and savings accounts or create a household budget that combines joint and individual expenses. But one question you may have is: If I marry someone with debt, does it become mine? Before tying the knot, it's important to understand how debt affects marital finances.
Who's Responsible for Debt Pre-Marriage?
When one or both partners have debt coming into the marriage, the debt belongs solely to the person that incurred them. Say, for example, you have $15,000 in private student loans in your name. Your spouse-to-be has $10,000 in credit card debt in their name. Neither of you would be responsible for the other person's debt in that scenario.
The exception is if one of you acted as a co-signer for the other person or if you opened a joint credit card account. Co-signers are treated as being equally responsible for repaying debt, regardless of whether both parties benefit from the money borrowed. So if your partner co-signed on a car loan or student loan because your credit score wasn't good enough to get the loan, they'd still share legal responsibility for the debt even if they don't drive the car or go to school.
Similarly, opening a joint credit card account--whether it be because one of you wants to build credit or double up on earning credit card rewards—would also make you both equally liable for the balance. Like a co-signed loan, a joint credit card account would show up on both of your credit reports and be reflected individually in your credit scores.
How Debt Is Handled After Marriage
Once you're married, the rules for how debt liability is divided are a little different. If you co-sign a debt—or open a joint credit account together—you would share responsibility for those equally. This sharing equally is whether you're both liable for a debt that's in only one of your names after marriage depends largely on where you live.
If you live in a community property state, most debts incurred after marriage may be treated as belonging to both spouses. Nine states have community property laws:
- New Mexico
Puerto Rico also follows community property laws. Each state has its own rules regarding which debts fall under the community property umbrella and when both spouses would be considered jointly responsible.
In common law states, debt taken on after marriage is usually treated as being separate and belonging only to the spouse that incurred them. The exception is those debts that are in the spouse's name only but benefit both partners. For instance, that might include credit card debt if the card was used to pay for basic needs like food, clothing, and shelter.
Implications of Sharing Debt in Marriage
There are two reasons it's important to understand whether you're responsible for a partner's debt after you're married. First, there are potential consequences you may face if a debt goes unpaid.
- If you've co-signed a debt or opened a joint account, late or negative payments could affect both your credit reports and scores. And you could both be sued for an outstanding debt, regardless of whether you live in a community property or common law state.
- If a debt is held by just one spouse in a community property state, creditors could seek to attach jointly held assets to recover what's owed. This creditor recovery may include bank accounts and any real property you own, such as a home, land, or vehicle. So even though you may not have been directly responsible for the debt, you'd still be on the hook for repaying it if your spouse defaults.
- If you and your partner divorce in a community property state, the debts you individually brought into the marriage would remain your own. But, debts introduced after the marriage could be divided equally between you—depending on the divorce laws in your state. In common law states, divorce courts typically follow an equitable distribution rule, meaning it's up to the court to decide how marital debts should be split.
Discuss Debt Before Getting Married
It's a good idea to talk with your partner about your financial situation before getting married, so you understand how much debt you have as a couple and who's responsible for which debt. This discussion is also an opportunity to flesh out your debt repayment strategy.
For example, if only one of you is entering the marriage with debt, talk about whether the money to repay it will come from the joint household budget. Your partner may be okay helping out with repaying your debts, but if not, that's something you should know beforehand. Remember to continue the discussion after you're married as you accumulate new debts and financial responsibilities.