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Debts you and your spouse incurred before marriage remain your own individual obligations—but you'll share responsibility for debts you take on together after the wedding. Before you tie the knot, it can be extremely helpful to understand how much debt you're each bringing to the marriage, which debts you're each responsible for, and how you'll manage the debt you take on as a couple. Here's some information that can help get the conversation started.
Whose Debt Is It, Anyway?
Exactly how spouses share responsibility for debts taken on after marriage depends in part on state laws, and in part on the type of debt you take on after your wedding day.
Debt in Community Property States
If you live in one of the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) or Alaska, where newlyweds can opt in to community property rules (but seldom do), debt assumed during your marriage is understood to be "community" responsibility, with each spouse under equal obligation for repayment. No matter whether both spouses agreed to the debts, or even whether both knew about them, both are equally responsible to cover them.
Debt in Common-Law States
If you live in any of the other states, or choose not to opt in Alaska, your marital debt will follow common-law rules, which allow spouses to take on debt as individuals even after marriage. Common-law rules also allow for spouses to maintain separate bank accounts, borrow money as individuals, get car loans and credit cards accounts individually, and assume other debts individually.
Common-law rules assign joint spousal responsibility for debts that benefit the couple and their family equally, such as food and clothing or rent on a shared apartment. They also distinguish between debts applied for individually, by one spouse or the other, and debts applied for jointly, by both spouses together.
Individual debt, including credit card accounts and loans, must be in the name of one spouse only, which means the credit application reflects only that spouse's credit score, income, employment history and so on. Whichever spouse's name is on the account is generally held responsible for repaying it. Put another way, the spouse whose name isn't on the debt is protected from having to cover it.
Joint debt may be incurred during marriage in a common-law state if both spouses apply for a loan or credit together. In that case, both spouses' credit scores are considered in the lending decision, along with both spouses' incomes and assets. If both spouses' names appear on the loan (mortgage contract, credit cardholder agreement, auto loan note, etc.), both are equally responsible for repayment under common-law rules.
How Do I Deal With My Spouse's Debt?
Whether or not your state says all your marital debts are conjoined, you and your spouse inevitably will incur some debt together. Even if you live in a common-law state, you may choose to apply for a mortgage or other loans with your spouse so that both of your incomes can be considered in the lending decision application. All this intermingling of debt means both of your attitudes and habits with respect to debt will definitely affect your marriage. Whether it affects the relationship for good or ill is largely a matter of openness and communication.
Before the wedding (and continuing at regular intervals afterward), you and your betrothed should determine where you stand financially. Discuss the debts you'll each bring into the marriage, your credit histories, any anxieties you may have around borrowing money or paying bills, and whether or not you've ever gotten in over your head with credit cards or other types of debt.
Once you know where you stand, you and your future spouse should talk about priorities in dealing with debts—both the ones you take on together and the ones you bring with you into the marriage. Among potential considerations:
- Making the spouse most comfortable with debts and money management the "payment captain" (or, perhaps, agreeing to get together monthly to review and pay the household bills).
- Determining how much of the joint household funds to allocate each month to cover mutual debts.
- Ensuring each spouse can keep up with (and eventually pay off) their individual debts.
- Deciding how to handle future debt (for a new home, vacation property, credit cards and so on).
These discussions can help you come up with strategies for managing your debt as a couple. For instance, couples who plan to apply for credit jointly in the future might choose to use pooled household funds to pay down one spouse's individual credit card bill, even if the debt is one spouse's alone.
Does My Spouse's Debt Affect My Credit Score?
Getting married cannot directly affect your credit score because the data on which those scores are based—compiled in your credit reports at the three national credit bureaus (Experian, TransUnion and Equifax)—do not include any information about marital status. Spouses retain their individual credit reports and credit scores after marriage; there's no such thing as a couple's credit report.
However, because both spouses' credit reports and scores are considered whenever a couple applies for a loan or credit card together, if you or your spouse has a poor credit history, that could affect your ability to borrow money jointly. And if you take out a loan or a credit card account jointly with your spouse, you're both equally responsible for the payments. So if, for instance, one spouse goes on a spending spree with a jointly held credit card, the other is on the hook for paying it, even if they disapprove of the purchase.
That's one reason why, before saying "I do," it's a good idea to have an open discussion about all kinds of financial matters, including debt. Spouses should enter the marriage with a clear understanding of their respective debt profiles (and credit standing), and a plan for managing future debt they take on together.