The wedding was beautiful. The honeymoon created lifelong memories. Now, you return home to settle in to your new life and into your new reality. Before you took the walk down the aisle to wed your new spouse, you were debt-free. You had low or even no credit card balances, and you were on the right path financially.
Things are a lot different now. You’ve married into debt: Credit cards, student loans, the debt you didn’t have, your spouse does have. How do you handle your new spouse’s debt, and how does it affect you?
Marriage and Debt: Mine, Yours, or Ours?
One of the first questions newlyweds who marry into debt ask is: Am I responsible for my new spouse’s debt? It all depends on the state in which you live, whether it is a community state, and whether the debt was incurred during your marriage.
In community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin – you may be liable for your spouse’s debt if the debt was incurred during the marriage. In non-community states and when you did not sign for the debt, you won’t be liable for the debt. Check your state’s laws to find out where your liability – or non-liability – lies.
But, even if you aren’t legally liable for your spouse’s debt, how can you handle it? Will you help pay for it, or do you believe that it’s your spouse’s responsibility to pay off debt incurred before you married on his or her own?
Note: My personal feelings with debt and marriage now is handling it together. My husband was completely debt free when we married and I was ready to work to my car and student loans by myself, but he was encouraged me to tackle it as a team. -Elle
Combining Debts and Income
If you decide to help your spouse pay off his or her debt, you can work together toward financial stability. You have several options for making the debt more manageable. If you have a significant amount of credit card debt, you may want to consolidate your debt. Be sure you work with a reputable debt consolidation company. Credit card companies are often willing to work with consumers to help make their monthly payments more affordable, another option for handling and paying down your debt.
While some companies, like Sallie Mae, no longer offer student loan consolidation, you can still consolidate your student loan debt through federal programs. If your spouse has significant student loan debt, consolidation may be able to save you a lot of money each month.
In addition to consolidating debt, create a budget, cutting costs where feasible. For example, you may be able to turn off the landline in lieu of using only your cell phone, or you can cancel your cable until your debt is more manageable.
If you believe the latter, you have several options for ensuring that your spouse pays his or her debt alone. (Your spouse may also want to consider debt consolidation and living with a budget, too.) Avoid opening a joint account until the debt is paid off; that way, you don’t have to worry about paying money toward the debt.
You may also want to split the bills to ensure both spouses are contributing equally. Some spouses opt for paying for the rent or mortgage while the other spouse pays utilities. Find a happy medium that works for both of you.
Ideally, whether you believe your spouse should pay for his or her own debt or you believe teamwork is the best solution, your best bet is to come up with how you’re going to deal with your spouse’s debt before you walk down the aisle.
George Gallagher is a personal finance and education blogger. He works with cuStudentLoans and is committed to helping students find affordable private student loans.