Am I Liable if I Marry Into Debt?

January 5, 2015 By in Money, Relationships Tags: , , , , , , , , , , , , 20 Comments

The other day a friend of mine and I were having dinner and she was discussing buying a house with her boyfriend. They’d been together for some time and were hoping to get married within the next few years.

“I’m wondering though,” she said, “if I’ll take on his debt when I marry him. ”

For the last two or three years, the number of people I know who are engaged, about to be engaged, or married has skyrocketed. This definitely corresponds with the thirties- many people hitting their thirties are (possibly) beginning to settle down and find others they want to be with for the rest of their lives. Not everyone, of course, but it’s definitely been a trend.

Which is why I was surprised that I didn’t know the answer- I felt like I’d researched this before, and the answer was no, but I couldn’t be positive. I actually forgot to look up the answer that night and then today Suze Orman just happened to bring it up on her podcast.

For anyone about to be married and wondering about it, the answer is:  NO, YOU WILL NOT LEGALLY INCUR ANY OF YOUR SPOUSE’S DEBT FROM BEFORE YOU WERE MARRIED. (Big sigh of relief!!) If your spouse incurred debt BEFORE you got married, it’s his or her debt ALONE. Of course, you can help with the debt, and some would say that once you’re married you share everything, including debt. But LEGALLY, debt incurred by one spouse before a marriage doesn’t touch the other one. No one is going to come after you for your spouse’s debt, and if they do they are JUST TRYING TO SCARE YOU. 

To avoid all the clarification questions Suze Orman (and all the finance websites I’ve been to) get all the time, I will clarify up front: the debt you’re NOT liable for includes EVERYTHING before marriage. It includes student loan debt, credit card debt, auto loan debt, tax debt, bank loans, EVERYTHING. You’re legally liable for NONE OF IT.

HOWEVER, debt incurred AFTER you get married is totally different. If you get married and your spouse suddenly gets into a lot of debt, that debt will be legally yours too IF you live in what are known as “Community Property States.”

Community-property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and the territory of Puerto Rico. Alaska also allows married couples to opt in to community-property status. Most people do not :p

If you’re NOT in any of these states, you’re in what’s known as a Common Law state. This means that in general if your spouse gets into debt, you’re not legally responsible. There are exceptions here such as if you open a joint account together and that account goes into collections (obviously, because now BOTH your names are on the account.)

Hope this solves things for any of you newly marrieds or almost-newlyweds! If any of our Canadian, UK, and other international readers would like to weigh in on the policy in your country, I’d love to learn about that (and I’m sure others would too!)

Sorry if this wasn’t the most fun topic ever, but it’s an important one as we head through the thirties. Here’s some funny photos of a flash mob I did once to lighten the mood, haha:

There were 50 of us dressed as brides and we stormed Times Square and took a lot of people by surprise.

There were 50 of us dressed as brides and we stormed Times Square and took a lot of people by surprise.

We were promoting a pretty terrible movie called "The Big Wedding." ;)

We were promoting a pretty terrible movie called “The Big Wedding.” 😉

 

Below are some links for even more details about marriage and debt:

The Simple Dollar: http://www.thesimpledollar.com/financial-infidelity-4-steps-for-healing-marriages-torn-by-finances/

Bankrate- http://www.bankrate.com/finance/debt/wife-not-married-to-spouse-s-old-debts-1.aspx#ixzz3Nzez1PNj

Nolo- http://www.nolo.com/legal-encyclopedia/debt-marriage-owe-spouse-debts-29572.html

Lifehacker- http://twocents.lifehacker.com/how-to-protect-your-credit-when-you-marry-into-debt-1576458795

 

 

 

20 responses

  1. Damn! I am in the middle of writing a post about this topic for my Smart Money blog! Can you edit this post into Part 1, Debt? Part 2 Assets that you for bring into a marriage. Retirement accounts, investment accounts, real estate (home) and inheritance. You are a much better writer than me and I can just reblog it.

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    • Hi Rico, Oh that’s awesome that we were writing the same thing! Great minds.. 😉 Anyway, you can absolutely reblog this, but I’m not sure what you mean by assets you bring into a marriage– do you mean: ‘will your spouse get half of your assets (retirement account, inheritance, home?)’ If so, I can write that (it’s a good idea)…though I’d probably write that one in pieces,— centering around retirement accounts– but I probably wouldn’t post it until next week or the week after.
      Thanks!

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      • My marriage debt liability post also included the money talk prior to marriage or living common law. Some issues that has to be resolved. Joint bank accounts, joint credit cards, split expenses 50/50 or combine all income into one big pot ….etc Do you talk about your financial goals prior or after getting together? How do you handle different goals, for example, he wants a motorcycle and you want to save for a house.

        Your next blog post should cover splitting assets brought into the relation. For example: My son who was single bought a house. Two years later, his girlfriend moved in, her name wasn’t on the house deed or on the mortgage. They lived together for three years, when they decide to buy a house together, she had to sign a waiver in order for my son to sell his house. Crazy right!!!

        Living common law was a SIN in my day, separated finances wasn’t even an option so I would appreciate your expertise.

        Thanks Laura

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  3. Oops phn freaked out….as I was saying…and if you or your spouse come into a fortune like winning the lottery after marriage….the windfall like debt would be shared in a community property state.

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  4. Such a great post. Good to know that legally it is separated.
    In reality, I think it you will still take on the other person’s debt/fortune as well. In our case for example, the student loan is only under one of our names. However, we look forward to buy a house together, have kids together, and hopefully send them to college together. If a person is in debt, it affects our common goals and therefore, together, we have to tackle the loan first 🙂

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    • Thanks so much! I totally agree that ‘promise’ of marriage that isn’t the legal part does include taking on each other’s debt. There are definitely mutual goals, and if one partner is bogged down with a student loan (which I totally know about all too well), the other spouse may need to take that on as well. 🙂 Congrats on a great partnership! 🙂

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  5. Fabulous post!!! having worked with engaged couples etc It’s always one of those ‘icky’ topics that surprisingly enough a lot of people would prefer to brush under a mat and forget about. Seems more effective hiding from it and facing it later lol However I think it’s an incredibly serious thing to consider – especially before tying the knot.
    Before my hubby met me he briefly dated a girl who disclosed she a massive amount of debt that she would probably never be able to resolve and wanted to be honest with him about going any further. It was such a problem it put him off going any further, she understood completely. On the other hand he also dated a woman who owned her own property outright at 32 and had accumulated considerable life savings…. the demand of a pre-nup was brought up several times by her mother (and they had only been dating a few weeks) needless to say the focus on money, protecting her assets and financial pressure by the mother was a no go – especially so early in the relationship. Money can cause such major issues, whether lack of or loads off. However I do feel more couples really should consider how to properly budget and prepare for harder times before saying I do – as well as looking into what implications their personal debt could cause… after all financial pressure is one of the biggest causes of divorce these days! Karen x

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  6. Karen, thanks for this! Yes, I totally agree- finance troubles are the #1 cause of divorce these days. It’s SO important that couples discuss these things beforehand because they can absolutely be dealt with and worked on. But you’re right- it’s the couples that brush it under the mat that end up having the biggest problems.
    Interesting your husband had both sides of the coin- it seems like not wanting to marry into a family with a very domineering mother-in-law would be a big part of one of the problems here, though! :0 It’s good your husband had those issues with his exes though- because now you’re with him! 😉 x

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  9. Pingback: When I’m Married, Does My Spouse Get My Assets? | omg, I'm thirty

  10. It’s just as easy to fall in love with someone who is debt free, as it is to fall for someone who is debt-laden. Likewise, it’s just as easy to fall in love with someone who is NOT an alcoholic, drug addict, or compulsive gambler, as it is to fall for someone who is!

    People make choices, and all too often, too many people make bad ones! Just my proverbial two cents. Great Blog by the way! Bravo!
    Blessings!

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