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Debt and Marriage- What You Should Know Before You Say ‘I Do’

Debt and Marriage- What You Should Know Before You Say ‘I Do’
Reviewed by Melissa Cook
Updated September 11, 2018

Debt and marriage don’t have to go hand in hand. But it’s quite interesting the phrase “for richer or poorer” is part of most wedding vows, as it implies that your spouse’s financial situation is in fact, a critical aspect of any marriage.

This is more relevant than ever, given the present situation of younger Americans today.  Whether it’s from credit card debt or student loans, a large proportion of young adults and millennials have some form of debt.  Debt isn’t just an issue for engaged couples or newlyweds, it has implications for couples that have been married for a while as well.

This topic is quite complex, so we’ve outlined a few basic ideas every couple should know.

Where you live matters

We often get asked if one spouse is liable for the other’s debts. As with most cases involving debt and marriage – it depends. In the United States, most states follow “common law” property rules. This means that debts and property owned by one spouse stay their own unless the debt was for food, shelter, tuition for children, or some other family necessity. A number of states follow “community property” rules, where debts and property acquired by one spouse are owned by both. Note that these are gross generalizations for the sake of explanation, as every state is somewhat different from how they treat debts and property. This holds true generally whether the other spouse was ignorant of the debt being signed.

The community property states are:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

Alaska allows spouses to sign an agreement making their assets community property, yet very few spouses will take the risk or the extra step to do this.

Community property implications

As we mentioned earlier, debt is not the only thing couples share in community property states. As the name implies, property and income are also shared and owned equally. The major exception is gifts and inheritances, though different states have their own ways of addressing this potential loophole. In practice, the courts will decide on an equitable way to split the debts in case of a divorce or legal separation.

The major implication of this is, a piece of property acquired by one spouse could be targeted by a creditor to pay for a debt incurred by the other spouse, as the couple is seen as one entity.  Property owned by the couple could also be used with no further consent needed by one party to get out of debt.

You do not own debts incurred by your spouse before marriage

Thankfully, in the clear majority of cases, you will not assume debts your spouse assumes before you are married. This holds true regardless of whether you live in a community property or a common law property state. The biggest exception is if a spouse becomes a joint account holder after marriage. As always, different states will have different takes on the matter.

The same rules apply to same-sex marriages

Same-sex marriages, civil unions, and domestic partnerships that are considered equivalent to marriage and will follow the same guidelines, as allowed by the laws of each state.

Getting out of debt is not always possible before marriage. In any case, debt should not necessarily be a deal-breaker when it comes to a couple’s pursuit of happiness. Be sure to be transparent with your partner on all your finances to ensure your relationship lasts beyond any debt. Settling your debt with Americor is a simple way to free you from your debt, which is beneficial for yourself and your partner.