How Marriage Affects Debt

Finding the person you want to spend the rest of your life with is a wondrous feeling, but that head-over-heels elation can distract you from the important questions you need to ask yourself when deciding whether to marry that person.

Sharing your life means sharing the good and the bad, and that includes your finances. If you or your partner have existing debts, it’s important to know how your marriage will affect those financial obligations.

Community property rules

One of the main factors for determining if you’re liable for your newly married spouse’s debt isn’t the type of debt it is but rather where you live. Most states treat existing, non-shared debt as individual obligations (referred to as “common law”), but a handful of states follow community property laws.

According to Rebecca Lake of The Balance, certain states following community property rules can treat debt incurred during a marriage as the equal responsibility of both partners, even if one spouse didn’t co-sign on the loans. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. So, depending on where you live, be prepared to be responsible for your partner’s debt even after a divorce.

Student loan debt

If your partner took out loans to pay for college before you were married, you will not be responsible for your partner’s student loan debt once you’re legally joined. However, that doesn’t mean your marriage won’t be affected by student loan debt or vice versa.

In an article for The Wall Street Journal, Cheryl Winokur Munk quotes Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project. Yu explains that if the debtor is enrolled in an income-based repayment plan, your combined household income could dramatically affect that repayment arrangement. You could work around that by filing your income taxes separately, but separate filing has greater impact on your household’s finances than just the student loan debt, so you have to look at all the penalties and deductions before deciding.

If your partner decides to return to school after you marry and takes out loans to pay for it, you could be responsible for repayment. Cheryl Winokur Munk identifies that student loan debt contracted during marriage could result in the spouse being contacted by creditors if the debtor defaults on payment, especially if you’re a co-signer.

Credit card debt

If you’re worried that your future partner’s credit card debt will be your responsibility, you don’t have to be concerned. Attorney Baran Bulkat of NOLO confirms that unless the credit card is a joint account with your name attached, the debt won’t become yours when you’re joined in matrimony. The majority of states track credit card debt by social security number. The only complication could be if you live in a community property state and the credit card debt is incurring during your marriage.

The same goes for medical, automotive and other types of debt, according to attorney Cara O’Neill of NOLO. Debts incurred by your spouse are not your responsibility unless you live in a community property state.

A mortgage

According to Amber Keefer of PocketSense, you’re not responsible for your spouse’s mortgage if you’re not a co-signer on the loan or documented as a co-owner of the property. However, the lender can foreclose on the home you’re living in with your partner if he/she doesn’t repay the mortgage on time. Plus, if you inherit the property from your partner, you are responsible for paying off the remainder of the loan, especially if you sell it through a reverse mortgage.

If you’re uncertain how the law will impact your financial situation, discuss your debts with a financial advisor.

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