Dealing With Debt In A Marriage

Dealing With Debt In A Marriage

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated May 4, 2021

Managing a huge amount of debt is tough enough, but it can be complicated when you have a spouse in the picture. More specifically, many people are concerned about partnering up with someone who may have a huge debt pile of their own. 

On top of your own debt that you have to manage, will you have to deal with your spouse’s debt too? More concerning, will your spouse’s debt automatically become yours after you tie the knot?

Let’s answer these pertinent questions.

Does Your Partner’s Debt Become Your Responsibility After Marriage? 

Good news: whatever debt that each person brings to the marriage before nuptials are exchanged remains each individual’s responsibility. That means each spouse will not be responsible or liable for any pre-existing debt that the other has accumulated before the marriage took place. The exception here is if you co-signed on any credit account, whether it was before you got married or after. 

Otherwise, any pre-existing debt remains each person’s responsibility and not both. So, if debt collectors ever come after your spouse for their unpaid debt, you will not be dragged into it if your name is not on the loan. And the same applies if you ever divorce: any debt that was brought into the marriage by your spouse will not be your responsibility, but will remain with your (ex) partner.

Will getting divorced affect your credit score?

Will Your Credit Score Be Affected?

If your spouse takes out a loan without your name on it and defaults on the loan, your credit score will not be affected. However, if your name is on the credit account, your credit score will be impacted. 

Only accounts that you have legally signed for will impact your credit report and influence your credit score. Even if your spouse files for a consumer proposal or bankruptcy, your credit score will not be affected if your name is not attached to any of the debts that are part of the situation.

Debt Incurred After Marriage

Here’s where things get complicated. If you and your spouse accumulate new debt in your marriage, you could both be on the hook. This is somewhat of a complex matter because new debts can be personal debts owed only by one spouse, or they can be joint debts.

If your spouse takes on a personal loan that he or she signs without you having anything to do with the debt, you should not be liable for it. It’s only if you take on the debt jointly or if you co-sign on the loan that you will become liable, even if your spouse originally promises to take care of the debt. 

That means that if your spouse takes out a loan, the lender will come after you if your spouse does not fulfill the contractual obligations of the loan payments if you co-signed. Basically, any debt that is incurred after a marriage takes place will be both spouses’ responsibility if both names are on the loan. 

But if only one person takes out a loan without the other’s name on it, the loan liability falls only on the original borrower’s lap. So, you won’t have any debt collectors coming after you if your name is nowhere to be found on a debt.

Budget Breakdown

Dealing With Debt As A Couple

There is typically a mixed bag of debt that marriages see. Each spouse will typically come into a marriage with their own individual debt, plus more debt will be accrued as a joint couple. The debt that each spouse goes into a marriage with will still need to be dealt with, while new debt that accumulates after a marriage takes place will also need to be managed by both parties. 

It’s helpful to come up with a workable budget so that you can each do your part to pay down your debt, as well as the joint debt you have both taken on. This will help to alleviate a lot of stress that often comes with money issues, which can inevitably cause a lot of wear on a marriage. 

How To Protect Yourself 

Before you exchange vows, it’s important to have a frank conversation about finances. Money is often the number one problem in marriages and can be the reason for marital breakdown. So it’s certainly important to take the time to have a discussion about money before you say ‘I do’. 

For starters, find out how much your partner owes before you get married, and be honest about how much you still owe as well. Also, have a discussion about how each person feels about debt and managing money. If you are on two completely opposite ends of the spectrum, you will need to come up with a solution and a compromise so that you can meet somewhere in the middle. Otherwise, money problems will be more likely to arise. 

Discuss your financial goals with your partner as well before you get married. Find out what aspirations your partner has and be open about what your financial goals are. Being on par with each other in this department is not just convenient, but important. It’s not fair that one person is doing all the work and making all the sacrifices to ensure a financially sound household while the other is not making an effort may even be squandering money away. Seeing eye to eye on money matters is essential.

If your spouse has bad credit or is not very responsible with money, don’t open joint credit cards or allow them to add you as a cardholder on their credit card accounts. If you do, your credit report will have their account added and you will be considered an authorized user. If your spouse is being irresponsible with the credit card, your credit score could be negatively affected. 

You might also want to consider signing a prenuptial agreement. If you are going onto the marriage with a lot of money and not much debt, while your spouse has little to contribute financially and is going in with a ton of debt, a prenuptial agreement may help protect you in the event of a d. Of course, this can be a touchy subject, so be sure to approach it with great care.

Final Thoughts

At the end of the day, the only debt that you are responsible for is the debt that you sign your name to. If the debt is under both of your names, or you co-signed on your spouse’s loan, you are liable. But if you had nothing to do with any loans or credit accounts and did not sign your name to anything, you are off the hook. 

Of course, you will still have to deal with your spouse’s debt to some degree as it will have an impact on your overall marital finances. If your spouse has incurred a lot of debt, it may be wise to deal with the debt right away so that it doesn’t cause any issues down the line. 

Rating of 5/5 based on 2 votes.

Lisa has been working as a writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same. She's used a variety of financial tools over the years and is currently growing her money with Wealthsimple, while stashing some capital in a liquid high-interest savings account so that she always has a financial cushion to fall back on. She's also been avidly using her Aeroplan TD credit card to collect as many Aeroplan points as possible to put towards her travels!

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