Committing to a relationship is a big step, and it’s even more difficult when your partner has debt.
Smartly dealing with debt can make your relationship stronger, even though it’s a problem that many couples have. This guide will use a series of questions to show you how to commit to someone who owes money.
Committing to Someone With Debt? 5 Big Questions Answered
#1. When you get married, does your spouse’s debt become yours?
No. You don’t inherit your spouse’s debt.
Each person is legally responsible for their debt. However, if you choose to, you and your spouse can pool resources to pay down debts, which may help improve low credit ratings before a combined credit application.
Debt acquired during marriage may be a different story.
You and your spouse are mutually responsible for debt taken on during the marriage if you live in a state with community property laws—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Alaska.
This means a lender can sue you and your partner for late payments. If divorced, financial liabilities may be borne equally, even if only one spouse incurred, agreed to, or knew about them.
Non-community property states, often known as common law property states, hold each spouse responsible for marriage debts except for family costs. For combined debts, both parties must repay.
#2. Should you pay off debt before getting married?
It’s not always necessary to pay off debt before getting married.
Getting your partner involved in the decision-making process is key. Think about your partner’s and your own financial situations and goals. Talk openly about your money problems and any plans you have to settle your debts.
Whether you choose to prioritize debt repayment or manage it strategically within your broader financial plan, building a strong financial foundation as a couple is crucial.
#3. Is it best to keep separate bank accounts if your partner is in debt?
Whether you should keep separate bank accounts when your partner is in debt is a personal choice that relies on
- your own preferences
- how you and your partner talk to each other
- your financial goals as a couple
Here are some things to think about to help you make a smart choice:
Have open communication with your partner.
The foundation of any healthy financial relationship is open and honest communication. Discuss your partner’s debt situation, including the type and amount of debt, the plan for repayment, and any concerns or expectations you both have.
Gain a clear understanding of your partner’s debt.
Understand your partner’s debt. Know the interest rates, monthly payments, and the overall repayment plan. This information will help you assess the impact of the debt on your joint financial situation.
Consider your comfort level.
Consider your comfort level with joint finances versus separate accounts. Some couples prefer having a combination of joint and individual accounts, allowing for shared expenses while maintaining financial autonomy. Others opt for fully joint accounts.
Evaluate financial goals.
Discuss your short-term and long-term financial goals as a couple.
Determine whether your partner’s debt aligns with your shared goals and how it fits into your joint financial plan. This conversation can guide your decision on how to structure your accounts.
Debt repayment plan.
If your partner is actively working on repaying the debt, discuss the repayment plan. Consider contributing jointly to accelerate debt repayment or providing emotional and moral support. Having a clear strategy can alleviate concerns and foster teamwork.
Understand the legal implications.
Different jurisdictions have varying rules regarding debt acquired before marriage. Understand the legal implications of debt in your location, as this can influence your decision on joint or separate accounts.
Emergency fund.
Regardless of your account structure, consider building and maintaining an emergency fund as a financial safety net. This fund can help cover unexpected expenses and prevent reliance on credit if unforeseen circumstances arise.
#4. Should I marry someone with bad credit?
Due to the fact that credit reports are different, marrying someone with bad credit will not hurt your own credit score. However, your spouse’s credit does affect the loans you can get together.
A lot of the time, married people apply for loans together (e.g., a mortgage). A joint application lets the lender look at both spouses’ incomes when deciding if the couple can afford to pay back the loan.
This may mean that the couple can borrow more money than either of them could on their own. So it is best to address debt issues before applying for shared credit accounts.
#5. Will we have trouble securing a mortgage loan if my partner carries a lot of debt?
Your partner’s debts shouldn’t affect your credit score or the mortgage lender’s choice if they are not tied to you in any way. However, most mortgage lenders will prefer that you both be mentioned on the mortgage if you are married or in a civil partnership.
When reviewing a mortgage application, lenders usually look at both applicants’ credit scores.
While your partner’s debt might not directly affect the down payment, it might impact your capacity to save for a mortgage. This is because it takes longer to save money for a down payment if a sizable amount of income is allocated to debt repayment.
Secondly, a lower credit score may result in a higher interest rate or, in some cases, difficulty securing a mortgage.
Occasionally, a co-signer or guarantor with a better credit history can help with the mortgage application. If there are problems with payments, though, this person is now accountable for the debt.
How to talk to your partner about debt
Discussing finance with your partner can be a bit awkward and tense. However, this can be even more difficult when they struggle with the debt burden.
Accept the fact
The first step to talking to your partner about debt is to accept the fact that they are in debt. Trying to deny the situation only hurts in the long run. The earlier you face the reality of their financial situation, the faster you can work out a solution with your partner.
Ask about their plans
Know how much debt they’re in and what plans they have for paying it off.
Be prepared
Having the debt talk can be emotion-laden.
This could steer the conversation and affect any meaningful discussion to take place. As such, it is important to be mentally prepared before you talk to your partner.
Take the time to write down everything you want to say before the conversation. This will reassure your partner that you are concerned about their financial situation in tackling their debts.
Empathize with your partner
The best way to discuss debt with your partner is to show that you understand their situation and are willing to help if necessary.
People get into debt for various reasons. However, blaming them does not help the situation. After all, nobody wants to be in debt, but it often comes about due to factors that are out of our hands.
So, stop blaming them and focus on what you can do to help them improve their circumstances.
Couples Debt? 7 Valuable Tips to Get Out Together→
Committing to Someone With Debt: Final Thoughts
This article provides insights into crucial questions surrounding commitment and debt, offering practical advice for couples facing these challenges.
Remember, marriage doesn’t automatically intertwine your financial destinies.
While you don’t inherit your spouse’s debt, the decisions you make together can impact your joint financial future. The key is to approach these decisions with transparency, understanding, and a shared commitment to financial well-being.