;)
As long as you both are committed and have good communication, you can make it work.
All of us come with some sort of extra baggage, whether it’s a complicated family situation, physical or mental health issues, or past trauma. Sometimes, that baggage takes the form of a bad financial situation, like being in a ton of debt and having a bad credit score.
If you’re getting ready to marry someone with bad credit and a lot of debt, know this: It’s not a reason in itself to avoid getting hitched. But you will need to think about why your spouse is in debt, and what that could mean for your marriage. It is totally possible to get over these hurdles as a couple, but you’ll need to know how to handle it.
You might have heard the scary statistics about how money problems are one of the leading causes of divorce. And that’s true: According to one study, just over half of divorces listed financial problems from at least one person as a reason for marriage failure. But here’s also what’s true: That doesn’t necessarily mean your marriage is doomed for failure if your spouse comes into the marriage with debt or bad credit. First, you’ll need to understand why they’re in this financial situation.
People get into debt and get bad credit for a lot of different reasons. According to one 2019 study in the American Journal of Public Health, for example, 71% of people cited medical bills as a reason for declaring bankruptcy, whereas only 44% of people said it was because they were living above their means.
It’s entirely possible that your future spouse has a bad credit score and debt for reasons that aren’t entirely their fault. And even if it was, it doesn’t necessarily mean your marriage is doomed for failure. Sometimes, realizing that you have a credit card debt problem is the biggest spur to do better, especially if the love of your life is being negatively affected by your actions.
When it comes to who’s responsible for debt in a marriage, it’s generally split up into two periods: debt that you took out before the marriage, and debt that you took out during the marriage.
You’ll be relieved to know that any debt your spouse took out before the marriage will always be theirs and theirs alone and vice versa — as long as they don’t refinance that loan along with you, that is. You can often save money by refinancing your debt or transferring it to a 0% APR credit card, especially if you have good credit.
But if that new debt is in both of your names or if you cosign on it, then it’ll be considered your debt too. If your spouse makes late payments, it’ll be marked on your credit report too with each of the credit bureaus like Experian.
Similarly, your credit score will always be yours and yours alone. Even if your spouse has a poor credit score and you have a perfect 850 credit score, the two will never be combined. Unfortunately though, that doesn’t mean that your spouse’s finances won’t affect eventually your own credit score in other ways.
Even though your spouse’s debt from before the marriage stays separate from you, they still impact you in other ways.
If a big chunk of your spouse’s paycheck is going to pay creditors, that’s less money they can bring to the table. For example, coming into a marriage with student loans is very common. But under some federal income-driven repayment plans, you’ll have to pay 20% of your disposable income…for up to 25 years, depending on the plan. That can be a big drag on your financial goals, like paying off that debt in the first place, saving for a house, or saving up for your kid’s college.
If your spouse is the primary income earner while you stay at home with the kids, for example, that means you’ll have a debt-to-income ratio of 20% or more for the next quarter-century. That’s a big handicap to get over, and the implications spill over into other areas of your life too, like buying a house.
One common case that pops up is if you want to buy a house with your spouse. Most people apply jointly for a mortgage, since that way both of your incomes are taken into account when deciding how much house you can potentially afford.
But if your spouse’s credit score isn’t very good, you might have to pay higher interest rates. You might even be denied entirely.
In that case, you might have better luck applying with a lender on your own. Then you run into a new problem: You’ll only be approved based on your own income. If you’re a stay-at-home-spouse with no income, you may not be able to qualify at all even if you yourself have a stellar credit history.
If your spouse’s debt has been referred to debt collectors, that can introduce a new level of anxiety into your life. Your spouse might receive phone calls or letters at your home in an effort to get them to pay up. Although they’re not directed at you, they can still be anxiety-inducing to see.
Your spouse’s debt from before your marriage stays as their debt, and your debt stays as your own too. But once you’re married, the picture looks a little different, and it depends on what type of state you live in.
In a community property state, both spouses are liable for any debt taken out during the marriage. That includes if you take out a loan without your spouse, and even if you didn’t have any knowledge of the debt at all. Even if your spouse kept it hidden from you, you’ll still owe that debt.
There are 10 community property states:
Unfortunately, if your spouse doesn’t pay up and the lender takes them to court, they could receive a judgement allowing the lender to get the money through other ways. They could garnish your spouse’s wages, or even garnish the money in your joint account. Even if you have a separate bank account, it’s possible the lender could stick their hand in and take money from your bank account too.
Luckily, most other states operate as common law property states, which means that it works like normal. You’re not liable for any debt that you didn’t directly sign for, even if your spouse took them out after you got married.
There are two important exceptions to this rule. First, if you did jointly sign or are a cosigner for the debt, or add them as an authorized user on your credit card, you’re still liable for that debt. In that case, you physically signed something or gave your spouse access to that debt, meaning you agree to be responsible for it too.
Second, if the debt your spouse took on was for both of your benefits, you may still be liable in some cases. For example, if your spouse takes out a mortgage or car loan that you both benefit from, creditors may still be able to garnish your joint bank account if they don’t pay up, even if you never agreed to the loan. The laws get a bit murkier here by state, so if you find yourself in these shoes it might be best to consult with an attorney.
So how do you know whether your marriage will be OK? Two words: communication, and commitment. You and your spouse have to commit to each other, and to overcoming these problems. In order to do that, you need open communication, even about tough, shameful, or anger-inducing issues.
For example, if your spouse does have a spending problem, you both may need to commit to a budget, and that can be very hard for spendaholics. They may find it hard to communicate their feelings in a productive conversation.
Or, if you’re overcoming medical bills, for example, you’ll both need to prioritize ways of increasing your income or areas of your budget to cut together. This might feel unfair if you’re the spouse who didn’t incur the bills in the first place.
There’s an entire world of personal finance articles written out there about how to improve your credit score and get out of debt. All of this is advice that you and your spouse can use to start working on these problems. What we’ll describe here are ways that you can specifically help your spouse do these things.
First things first: You need to have an honest conversation about whether your new spouse really does want to improve their credit or pay down their debt. It’s work — hard work, and they may need to make big sacrifices or change deeply ingrained bad habits.
If they’re not ready to do those things, nothing you can do or say will help them. It’ll only seem like you’re nagging them, and soon that’ll start driving a wedge of resentment between you. So first, before you start, make sure they really are up for doing the work too.
Even if they are interested in doing the work, sometimes emotions get in the way a little too much. When that happens, it’s a good idea to see a financial counselor—together. You can find them through groups like the Association for Financial Counseling and Planning Education (AFCPE).
Financial counselors are similar to a financial planner, but they specifically help you work on the emotional side of money management, which actually drives most of your day-to-day decisions. Just like a regular counselor, they can help facilitate discussions between you so that you can work out your difficult emotions and chart a path forward.
Sometimes all your spouse needs is someone to help hold them accountable. You can help them think through spending decisions, come up with ideas to cope with spending triggers, set goals, and then help celebrate those wins. Even better, you can work on these goals together. For example, if you’re trying to lose weight or develop better habits of your own, you can support each other.
Being in debt or having a bad credit score doesn’t mean someone is a bad person, or a bad potential spouse. A person can still be a great spouse even with a bad credit report. But it does mean that your marriage might come with certain challenges, such as not having as much income to spend or having a harder time meeting your other financial goals.
As long as you’re both committed to each other and have honest and open communication, your marriage will be just fine, even with this speed bump. In fact, successfully dealing with these issues may even help you as a married couple. You can use these skills in other areas too to make your marriage even stronger.
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