4 Things to Know About Debt and Marriage

September 14, 2021

Debt is not a foreign word to many people. Especially during the pandemic period, the rise in debt for individual households saw a rapid increase.  According to Forbes, in 2020, consumers owed $323 billion on personal loans, an all-time high.  A contributing factor to this increase was the job losses felt across the nation.

How can debt be dealt with among married couples?  Often, couples find themselves weighed down with their spouse’s debt leading to disagreements. Consequently, many search for answers as to whether or not they are liable for their spouse’s debt. The debt burden for married couples can be significant if not handled correctly and communication between the spouses breaks down.

It is, therefore, vital to know which debts incurred by your spouse are a liability to you.  Depending on where you live, get to know the laws that govern marital debt liability.  In America, different laws govern different states.  Some states follow the “community state” property rules, and others follow the “Equity Distribution” property rules.

Let us consider 4 things you need to know about debt and your marriage:


Knowing When You’re Liable for Your Spouse’s Debt

1.  Community States property Rules for Marital Debts

In a community property state, both spouses in a marriage incur the debts of each spouse, even if only one person signed off on the paperwork for the debt.  Most debts incurred during your marriage are considered joint debts.  The community property states rule stands even if you do not know the debt your spouse incurs. When your spouse defaults on a loan payment, creditors are within their right to confiscate both your incomes, assets, or property acquired after your wedding day.


2.  Debts incurred before Marriage.

Debts incurred before your marriage, such as a school tuition loan, or auto loans, and others, are not automatically transferred to you as a spouse.  However, your spouse’s premarital debts may affect you during your marriage.  How?  To settle your spouse’s premarital debts, creditors might tag your spouse’s income, assets, or property, which adversely will affect your financial stability.


3.  Pre-marital Joint Accounts and Debts

The exception to pre-marital debts. If you and your spouse co-sign on a joint account, car loan, school loan, or any other loan before your wedding, you are liable to pay off the debt.  Co-signing a loan means that you and your spouse legally assume responsibility to settle the debts.


4.  Debts Acquired During Marriage

During your marriage, debts incurred to pay for necessities that benefit the marriage like food, school fees, something you jointly enjoy, and others, are a liability for both spouses.  If you are a joint holder of a credit card account, and your spouse defaults on its payment, you are liable to continue paying off the credit card debts.  If you both decide to consolidate your accrued debts, you and your spouse become responsible for the consolidated debt.


The same stands true for joint property and assets obtained via loans during your marriage.  Have you cosigned a loan agreement to purchase a house, a car, land, renovate your home, to mention a few?  If so, you both are jointly liable for any debts incurred irrespective of whose name is on the loan paperwork.

For more information and financial advice from Firefighters Credit Union, contact us today.

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