If you think you have found the love of your life and are ready to settle down into marriage, you need to have a serious talk about finances—specifically debt before you start making wedding plans.
In most states, you are not legally accountable for bills built up before getting married. However, depending on the state you live in, the amount of debt you are liable for could change dramatically after you take your vows.
Most states function under what is called common-law, according to the IRS. If a married couple opens a joint account or a shared credit card, they are both responsible for paying the debt back.
If only one of you puts your name on an account, such as a car loan, only that person will be responsible for that loan. This also means that bill collectors can’t come after you if they fail to pay the bill.
There are few exceptions for essential joint household expenses. Things like childcare, housing, or food must be shared by both spouses even if you never created a joint account.
Responsibility for shared accounts goes for those both new and existing. If you sign up as a joint holder on your spouse’s existing credit card, you are now responsible for everything charged to that card.
Bank accounts work the same way: once you both sign on, the balance is now a shared asset regardless of who makes deposits.
This could work against you if a creditor goes after your spouse for debt they owe and want to take the money in your shared account.
Community Property States
In America’s nine community property states, the laws are very different: all property and debt is shared once a couple is married. These states are:
- New Mexico
In these states, you are not liable for most of your spouse’s debt acquired before marriage, but the IRS says any debt taken on by either party after the marriage is automatically shared debt.
If you want to get around joint responsibility, one option is to sign a legal agreement that states all debt and income are treated individually.
This is common when one spouse opens their own business and can be done as a prenuptial or post-nuptial agreement.
Marriage can be a serious financial decision that you should not take carelessly. You will not only be liable for another person’s debt, but it could also hurt your credit history.
A joint loan could mean higher interest rates or getting denied if your spouse has a bad credit score. The best idea is to discuss finances with your partner before you get married.