Five things to know about marriage and debt

Couple discussing marriage and debt

Even if wedding bells aren’t in your near future, you should work to pay off your debt before tying the knot.

When you marry someone, you’re merging many parts of your financial lives — from everyday decisions like how much to spend on groceries to more serious matters like owning a home together.

Even if marriage isn’t in your immediate future, it’s wise to know the practical implications that go beyond the ceremony and reception — like if your student loan debt or credit card balance will become the responsibility of your spouse. Because of concerns like this, marriage warrants some frank discussions about how to handle your money together.

Part of that discussion, even if it may be difficult to broach, should include the issue of debt, particularly if one of you enters the marriage with more financial liabilities than the other. It’s important to understand your rights and responsibilities regarding your partner’s debts — and how that can impact your lives together.

With that in mind, here are some key things everyone should know about debt and marriage before tying the knot.

1. Debt you took on while you were single generally remains all yours.

Regardless of the state in which you live, pre-marriage debt generally stays with the person who incurred it. If you took out student loans for your education, your spouse isn’t responsible for them, even if you divorce or pass away. The same holds true of other debts, like credit card balances, car loans, and mortgages.

2. However, if you sign on to pre-marriage debt, you share it.

Take the example of refinancing a home. If your spouse bought a house before you got married, but you refinanced it together and added your name to the title after tying the knot, you’re equally responsible for the mortgage. Even if you divorce or your spouse stops sending in the mortgage check, you’d be on the hook for payment.

The same would be true if you signed on as a “joint owner” of your spouse’s existing credit card account or cosigned for an auto or debt consolidation loan.

3. Whether you share “marriage debt” depends on where you live.

If you live in one of the 40 U.S. states that follow the “common law” system of property ownership, debt issues are fairly clear. The common law system says that property acquired by one spouse is owned by that person.

Generally speaking, when one of you takes on debt after you’re married, only the spouse who signed the paperwork for the debt is responsible for it, even after a death or divorce. For example, if you buy a car and only your name is on the title, your spouse cannot claim it if you divorce. (However, if their name is also on the title, it belongs to both of you).

In the nine U.S. “community property” states (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin) married couples are usually equally responsible for those debts entered into after marriage — no matter which spouse’s name is on the legal documents.

4.  Your credit ratings don’t marry when you do.

For better or for worse, you and your spouse have separate credit histories and ratings. They’re connected to your Social Security number and stay that way. If you have a great credit score and your spouse does not, marrying you will not improve their score — or bring yours down.

This is worth considering carefully if you plan to apply for credit together in the future, such as to buy a home. It can also help to review your credit reports together — to see your full financial picture, as a couple.

5. Some things may be best kept separate.

Even in good marriages between two responsible financial partners, it can sometimes be simpler to keep credit cards in your own names, for the purpose of easily splitting any debt.

If you and your spouse want to use the same credit account for simplicity, one of you can be the official account owner and add the spouse as an “authorized user.” The authorized user isn’t legally responsible for the debt, and you can remove him or her from the account if you ever need to do so. Just be sure to realize that the account owner is ultimately responsible for debt incurred by the authorized user.

Whatever your situation, marriage presents a lot of choices. Should you combine finances? How do you set a budget for your new family? Learn more about handling marriage and debt from Wells Fargo.

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