Am I Responsible for My Spouse’s Credit Card Debt?
“For richer or for poorer.” When you get married, you utter these words, vowing to take care of each other regardless of the challenges that come your way. But does that mean you are responsible for your spouse’s debt?
Many couples decide against commingling finances and instead opt to maintain their separate, established accounts. If there are no joint accounts, how can you be liable for your spouse’s debt?
Whether you bear responsibility for your spouse’s credit card debt depends on many factors including when the debt was accrued, how the account has been managed throughout the relationship, and perhaps most importantly, where you live.
Here, we explain the basics of debt responsibility among spouses.
Debt before marriage: Not my debt, not my problem
While you may worry about inheriting your in-laws, you generally do not need to be concerned about inheriting your spouse’s debt through marriage – except, of course, when it comes to wedding debt!. Generally, debt acquired by your spouse before marriage remains your spouse’s responsibility. In other words, generally speaking, you do not become responsible for your spouse’s debt by marrying.
However, whether you are responsible for your spouse’s debt depends on the specifics of your situation. For example, some state laws provide that individual debt can become marital debt. Where this conversion is permitted, pre-marital debt that provides a benefit through marriage may become marital debt and therefore, the equal responsibility of each spouse. A house purchased by one person which then becomes the marital home after marriage is one example of a pre-marital debt that can become marital debt.
In addition to conversion, there are several exceptions for when the individual debt of your spouse becomes your responsibility.
If, before marriage, you co-signed for your spouse, the two of you opened a joint account, or if you shared a credit card, these scenarios could result in responsibility for your spouse’s debt; however, in these situations the debt responsibility is less about the marriage and more about being named on the debt.
As such, while the general rule is that debt acquired before marriage is the responsibility of the individual only and not the couple, there are exceptions. This is all the more reason to discuss your finances before tying the knot. Having a plan for who will pay debt existing before marriage and how you will manage debt acquired during the marriage can eliminate financial disagreements down the road. Meeting with a family law attorney to discuss pre-nuptial agreements and other financial planning documents is also a wise pre-marital decision to avoid money disputes later.
Debt acquired within a marriage: Varies by state
The law in your state determines whether you are responsible for debt acquired by your spouse during marriage. Many state laws provide that you are only responsible for your debt; however, if your spouse’s debt is also in your name, it becomes your responsibility. So, like the exception explained above for debt acquired before marriage, if you helped your spouse acquire the debt by co-signing or if you are named on the account, your spouse’s debt can be your responsibility. This is true even if you did not take an active role in acquiring it.
Even if the debt is only in your spouse’s name and you are not technically affiliated with the account in any manner, you can still be indirectly responsible. If your spouse defaults, your spouse’s assets can be subject to forfeiture to satisfy the debt – including assets owned jointly with you. So, while your spouse’s creditor may not be able to come after you directly, you can be impacted.
If your state follows the law of community property, then all debt acquired during a marriage is assumed to be marital property meaning you are jointly responsible for any debt your spouse acquires regardless of whether you were directly involved in obtaining the debt or not. While generally, community property states treat individual debt acquired before marriage as the responsibility of that individual only, some state laws provide for conversion of individual debt to marital property. If the marriage benefits from the debt, like a mortgage for a house that becomes the marital home, the debt can be converted into marital property (thus making it the responsibility of the couple) as opposed to the sole responsibility of the individual who acquired it.
However, because laws often change, it is important to consult with an attorney in your state for personalized advice.
Debt and divorce: Where the lines start to blur
Generally, the rules for debt carry through to divorce: if the laws in your state provide that debt acquired before marriage remains individual debt, then it is unlikely you will be responsible for your spouse’s debt acquired before the marriage. However, if an exception applies to convert individual debt into marital debt, you could be responsible for this debt after marriage. Determining who is responsible for marital debt, or any debt acquired during the marriage, can be one of the more troublesome topics in a divorce. Many couples divorce over financial conflicts, so it can be difficult for a divorcing couple to agree to any financial resolution. Prenuptial agreements and other agreements regarding money management can help make this process less emotional and more straight-forward.
It is best to address money and how you will manage your finances before marriage, but even if you are already married or contemplating separation, it is never too late to improve the transparency in your finances. Understand what debt each spouse had coming into the marriage, what marital debt has been acquired, and how the debt is being managed and paid. And if you need some help managing debt, don’t fear: there are ample credit card debt consolidation options you can both explore to help you wipe away the stain of debt before it drives a wedge between the two of you…or worse, before it lead to a credit card debt lawsuit with overzealous collectors.
The takeaway: Debt matters
When it comes to debt within a marriage, no matter when and how it was acquired, it is not an issue that couples should sweep under the rug. Debt affects your credit report and scores, which impacts your borrowing ability from interest rates and repayment terms, and it can even affect your employment opportunities. While there is no such thing as a couple’s credit score, your spouse’s credit can affect your ability to borrow jointly and it can impact your credit score if you are named on an account that goes into default, even if your spouse was responsible for acquiring the debt.
Not to mention, the stain of debt can seriously tarnish your relationships. It causes stress, can lead to finger-pointing, and ultimately, can trigger fights that disintegrate a relationship altogether. As such, it’s best to stay apprised of your financial situation before AND during your marriage in order to proactively manage any issues that can arise down the road.
For more information about managing your debt, contact a financial advisor or a reputable debt relief company for assistance.