In the excitement of getting married and the rush to say “I do,” one thing that can get overlooked is the state of you and your new spouse’s financial health. There are times when people wake up the day after the wedding and realize they don’t know much about their partner’s financial past or present.
Understanding the rules of debt ownership for newlyweds allows you to know which of your spouse’s debts can affect you after marriage, and which ones remain his or hers alone.
Let’s say that before you got married, you worked with a credit counseling agency to come up with a plan for paying debt. While you’re now debt free, your new spouse still has a few thousand dollars in credit card debt and some student loans that he or she acquired before your wedding. The good news is, for you at least, that any debts your partner had before the wedding remain his or her own debts. Creditors can’t start coming after you about them and you aren’t legally responsible for them. You might want to help your spouse pay them off, since as a married couple, you’re in this together, but you don’t have to do that.
Community Property vs. Common Law States
Debt ownership for newlyweds gets a little trickier when it comes to debt incurred after your wedding. The state you live in plays a part in determining which debts you are both responsible for and which debts are only the responsibility of either you or your spouse. Nine states in the U.S. are community property states while the remaining states are common law states. Community property is defined by the Internal Revenue Service as property (or debt) that is acquired by either spouse or by both spouses during the marriage while living in a community property state. That means that if your spouse opens a new credit card in his or her name only after you get married, and you live in California, one of the community property states, you are responsible for half of the account.
In the states that follow common law, you and your spouse only share ownership of a debt if it was acquired to benefit both of you. For example, if you open a credit card in both of your names after marriage or if you get a mortgage to buy a house, you are both responsible for the debt. But, if your spouse goes and opens his or her own credit card and your name isn’t on it, you aren’t responsible for any of the debt he or she incurs.
Credit Scores After Marriage
While you and your spouse might share some debts after you get married, and you might be equally responsible for those debts, what you don’t share is a credit score. Marrying someone with awesome credit won’t make your credit score better, nor will marrying someone with terrible credit make your score worse. Although you don’t acquire your partner’s score, it does play a part in determining whether you’re able to receive a loan together. A lender might turn you both down, even if one of you has excellent credit and the other doesn’t.
There are some ways to work around community property and common law rules, if you want. You can sign a prenuptial agreement to protect yourself, if needed. But, most importantly, it’s a good idea to start your marriage off on the right foot and to have an honest heart to heart about debt and money before either of you walk down the aisle.
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Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
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