How Debt Works Before and After Marriage

How Debt Works Before and After Marriage

by Mar 7, 2019Credit And Debt, Financial Planning

Getting married usually means couples (eventually) merge all aspects of their lives together, and this includes finances. While there is no “right” way for a married couple to manage their money together, they should be aware of how the income, and more importantly the debt they generate together after getting married, works.

It’s important for couples who may be engaged to understand how debt works before and after marriage, because those two scenarios are very different in California.

How Debt Works Before Marriage

Basically, any debt either person has before getting married belongs solely to the person who incurred it. This means for example, if one person has $100,000 in student loan debt before getting married, that debt is theirs and theirs alone, even after getting married.

The same principle applies to things like credit card debt, car loans, mortgages, etc. The only exception would be if one person cosigns for the other on a loan (a car loan is a common example) before getting married. Cosigners are treated as being equally responsible for repaying a debt, regardless of marital status.

How Debt Works After Marriage

California is what’s known as a “community property” state. What this means is that in California, most debts incurred after marriage are treated as belonging to both spouses equally.

This means that a couple that buys a home, cars, or incurs credit card debt (on a joint account) after getting married shares the responsibility for that debt equally, even if they get divorced.

Because of community property laws, it is especially important that couples take the time before getting married to get on the same page about their finances. If one spouse is a spender, and the other is a saver, it could have major consequences for both if the marriage doesn’t work out.

Creating A Plan For Debt

Having an open and honest conversation about money, and especially debt, can be really hard for some couples. But it’s a crucial step towards creating a workable financial plan before and after marriage.

For those who are struggling with their partner to talk about and plan finances and debt, consider talking with an experienced financial planner. A good financial planner can help analyze your current financial situation, provide guidance and insight about debt repayment, and act as a neutral third party to help couples plot a successful course of action.

For more information about financial planning and debt repayment, contact our offices today for a free consultation.

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