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Do you marry someone who has big debt?

He may be Prince Charming to you, but not to his collectors

By

To Her Credit
To Her Credit, Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets.
Ask Sally a question, or read her previous answers in the To Her Credit archive
Question for the CreditCards.com expert

Dear To Her Credit,
My boyfriend and I are talking about marriage. I think he will propose soon. I filed for a Chapter 7 bankruptcy two years ago, but now I have no new or old debt and am on the right track.

My boyfriend has a great career and makes about $80,000 a year. We live together, and he is responsible with his bills. He has old debt from medical bills and a few other debtors that are in collections from about five to 10 years ago (he might owe about $70,000 total).

How will this affect my credit if we get married? I want to marry him no matter what, and he is considering filing bankruptcy. Currently, he has an auto loan and, for some reason, his credit score is not bad. What will happen if he files bankruptcy in a few years after we get married? If we are married, can he file bankruptcy in his name only? Also, since I have already filed bankruptcy two years ago, does that affect him? Any information will be helpful. Thank you! -- Brittany

Answer for the CreditCards.com expert

Dear Brittany,
He's "responsible with his bills," but he has $70,000 in debt -- some of which is in collections? I'm sure he's a great guy, but you need a little reality check here! Your boyfriend is in deep financial trouble, and if you're not careful, you're going to be there with him. Before you say "I do" to "for richer, for poorer," make sure you don't get to "poorer" faster than you can walk down the aisle.

People in their 20s tell me their generation has an expectation of being in debt. They assume they'll owe tens of thousands of dollars in student loans, and they can't imagine buying an embarrassing old car when everyone else buys one via a car loan. It's easy to think if everyone is in debt, it's not so bad. Trust me, though, $70,000 in non-mortgage debt is not OK.

I'm assuming your boyfriend's auto loan accounts for a large portion of his debt. Bankruptcy won't get rid of his auto loan or any other secured debts. It also won't get him out of child support, alimony, student loans or most back taxes.

With $80,000 in income, bankruptcy may not even get rid of many of your boyfriend's debts. People who have above-average income, under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, generally file for Chapter 13 bankruptcy instead of Chapter 7. Under Chapter 13, he would go through the legal fees and hassles of a bankruptcy, but he still has to pay off at least a portion of his debts over the next three to five years. If he has to pay the debts anyway, what's the point of filing? Yes, filing for Chapter 13 can help if he has creditors hassling him day and night, and it can reduce his debt to what he can expect to pay. However, he can achieve those goals without filing for bankruptcy.

If your boyfriend does choose to file for bankruptcy after you are married, your previous bankruptcy will not prevent him from doing so. As long as you don't let him add you to his accounts, your credit doesn't change, and you won't have to file for bankruptcy again just because he does. That doesn't mean his debt won't affect you. As a married couple, you'll want to plan a wonderful future together -- a future that takes money to realize. That's going to be harder if one partner enters the marriage with the ball and chain of heavy debt. Although I don't recommend bankruptcy based on the information you've provided, I do think he needs to become more alarmed about the financial state he is in and start doing something to fix it -- for both of your sakes.

I'm glad to hear you are on the right track after bankruptcy. So many people get rid of their old debts, but by the time the bankruptcy is settled, they're racking up bills again. You must have learned some lessons and be applying better financial management principles. Financial management doesn't have to be complicated as it's just a matter of finding what works for you. For some people, that means not using any credit cards or even any plastic at all. Most people can learn to manage credit to their advantage if they try. You deserve kudos for getting on the right track.

My advice for your boyfriend would be to sell his car, pay off the loan and go on a strict austerity plan for the next two years to pay off the rest of his debt, regardless of when you decide to marry. Meanwhile, the two of you need to have some serious talks about finances, and perhaps take a personal finance class or get debt counseling. It might not be the most fun part of getting ready for a wedding, but it might be the most important thing you do to help get your marriage off to a good start.

See related: Who pays fiance's card debt if he dies?, You're marrying your fiance's debts, too

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Published: January 20, 2012


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