Marriage, Finances, And Debt – The Truth
Money destroys marriages. At least that is what a recent study found. When newlyweds get married they rarely ever talk about their finances because they are focused solely on the love. Unfortunately, the government does not look at the love part of it at all. According to the government marriage is a legally binding contract that has little to do with love. In fact, when you get married, you assume the other’s debt and vice versa. So, when two people get married and fail to talk about finances, it can lead to disaster. No wonder money is the leading cause of divorce behind infidelity in the country.
It is a really good idea to talk about each other’s financial situation before getting married. After all, marriage is a legally binding contract that has specific legal benefits. If you speak with your prospective spouse and the marriage does not make financial sense right away then perhaps it is better to defer the arrangement to a later debt; to attack the debt of the weakest link before dragging both into an unfavorable situation.
How Does This Affect Us
Not all debt is inherited during a marriage. Both of you still have your own individual financial identities but there are ways to drag each other down. Just because you get married doesn’t mean that the other will have to shoulder all of the debt the other one has accumulated and vice versa. That credit card debt that she piled up will not drag your credit score down, but there are ways in which it could.
Say he goes and buys a bunch of sports memorabilia that nobody needs. He charges $10,000 on a credit card. This could hit both of the partners equally if they took out a joint card in both of their names. Now, magically, both spouses are responsible for this debt. If the card stayed only in his name then only he would be responsible for the debt. Essentially, marriage makes dual credit cards available, even retroactively, which can affect both partners.
This means that one partner could have a high balance on a card that was accumulated before the marriage took place. The legally binding contract would take place and then another name could be added to the card. In this case the debt was accumulated before the marriage and it affects both partners.
Now, if you couldn’t make the payments on this card then it would default. If one name was on the card only one person’s credit rating would be affected. But, if both names are on the card then both people will be affected equally. This is an example of marriage and debt colliding; it isn’t pretty.
The Marriage and Debt Law
The law in the U.S. makes it clear – debt incurred before a marriage takes place does not affect both people. So, when getting married, the person’s current financial status should not be a big issue. Well, at least in the immediate future. You can marry someone in an enormous amount of debt and not be affected immediately. However, you will be affected eventually.
If the person you are marrying is mired in debt then any loans taken out in the future will have to be in your name. This is a tricky situation. If your relationship does not work out then you will be left with the debt. The other person will have no liability and could just walk away from that loan whether it be for a house or car. You will be left to make the payments because the loan is in your name.
However, the law gets a little trickier. Any debt incurred during marriage will affect both of your financial standings. So, if you take out a credit card and your spouse does not know then you could do serious damage to their credit score. All you need to do is go out and rack up a huge amount of debt and then go into default. The credit card company will report this against both people’s credit and go after each individual to collect the debt.
This is the tricky part. Both partners do not have to know about the credit card. It is not like opening a joint account or a joint credit card. You do not have to be aware for the credit card company to garnish your wages or attack your credit. According to the law they can go after both parties equally. It is essential to communicate with your partner about any lines of credit during the marriage. It is a legally binding contract, after all.
Your Marriage Certificate is a Financial Contract
There is a bounty of advantages to getting married. You get to spend time with your loved one, build a life with them and benefit from the legal advantages of marriage. You get tax relief, you will not have to testify against your partner in the court of law and hold the power of attorney. Unfortunately, for those in financial distress, it means assuming responsibility for each other’s debt while married. This can be a huge advantage if the both of you have a plan of attack and can do it right. It can also be detrimental to the responsible one in the marriage if it is done wrong.
It is imperative to talk about finances before getting married. This may be an uncomfortable conversation but it is one that needs to take place. Again, the government looks at marriage as a contract, it doesn’t look at it in terms of love, so, like the government, it behooves you to treat it as such, even for a short period of time during an uncomfortable conversation.
The debt you have incurred before marriage will not be mutual. Conflict can arise if one partner has to burden the loans because the other is overwhelmed. A line of credit will affect both partners equally if it is acquired during the marriage and none of this takes place if you do not legally marry. Talk with your partner, weigh your financial situations and do the right thing for you.