5 ideas to deal with your betrothed's debt before marriage

5 ideas to deal with your betrothed's debt before marriage
5 ideas to deal with your betrothed's debt before marriage

While wedding planning is fairy-tale exciting, a nagging concern can cast a long, grim shadow: Your betrothed may be carrying significant credit card debt.

Regardless of the reason for the debt, that financial obligation is likely to figure into your marriage.

Before you send the invitations, make sure you and your fiance or fiancee have had a healthy discussion about this debt and other aspects of your financial lives. How will you handle them once the gift wrap is recycled and the wedding gown put into storage?

"It's really important to be honest about it," says financial counselor and money coach Susan Bross, who lives in Oregon and serves clients in the San Francisco Bay Area. "It's not vital to go into a marriage debt-free. It is vital to have a plan for what is going to happen around it."

It's not vital to go into a marriage debt free. It is vital to have a plan for what is going to happen around it.

-- Susan Bross
Financial counselor and money coach

While every situation is different, experts do offer several pieces of general advice, both logistical and emotional, on facing your intended's debt. 

1. See a financial therapist.
Financial issues are often fraught with emotion and questions of power, trust and fairness, in many cases stemming from childhood experiences long forgotten, at least on a conscious level. 

Judith Barr, a financial psychotherapist in Brookfield, Connecticut, suggests all engaged couples would be well served by working with someone in her profession. Regardless of occupation or financial status, everyone's money behavior is driven by feelings and childhood experiences they're unaware of on a conscious level, she says.

"No matter how many things they do on an outer level, no matter how many budgets they make ... nothing is really going to solve the problem in a sustained way if they don't do the inner work" and get to the root of their problem, says Barr.

"We all have a relationship with money that is deep in our unconscious even if we think we know all about our relationship with money," says Barr. "We might think it's very obvious in the outer world but usually there's something much deeper than we're ever aware of."

A person living below the poverty level and the head of a billion-dollar company both might have decided early in life that they would "never have enough," but they have lived out that belief differently, she says.

Barr asks the people she works with to talk to money. Someone with a low salary might say to money, "You're never there when I need you," she explains. "That comes from a place where that's how they experienced someone in their life when they were very young," and now they act it out with money and people, she says. "They put up a force field of their own energy to keep money away."

Debt, she says, is "a sign that there's something coming up to be healed," individually and as a couple. "You can look at it with curiosity and intrigue."

2. Come up with a strategy, together, to address the debt and other financial issues.
That doesn't necessarily mean the debt-free spouse will pay off the loan, and in fact that could be a bad move for the marriage. Both parties, however, should be clear about plans and expectations.

Consider the type of debt, says Greg Plechner, principal and wealth manager at Modera Wealth Management in Westwood, New Jersey. The financial planner says he would look differently at a future spouse who took on college loans to invest in himself or herself than he would "somebody who's maxing out credit cards to buy jewelry." 

"If it were my daughter and she were marrying somebody that had $50,000 in credit card debt, I would have a serious talk with her and say, 'What is this indicative of?'" he says. "That would make me nervous as a dad." The college loans wouldn't be much cause for concern in a solid relationship, he says.

Know your fiance's credit score before you get married and come up with a game plan, he says.

Transparency and trust are key, according to Bross, who says learning about debt from someone you've dated for a few months is different from discovering hidden financial obligations of a fiancee you've dated for three years. One way to build trust is for the debt-laden partner to be transparent, so his or her future spouse knows that payments are being made to reduce the debt.

If it were my daughter and she were marrying somebody that had $50,000 in credit card debt, I would have a serious talk with her and say, 'What is this indicative of?'

-- Greg Plechner
Modera Wealth Management

Have financial meetings, and not just about debt. Talk about paying bills, summer vacation and so forth "and the debt could be part of that," says Bross.

"The fear that I run across with a lot of couples is that one of them is running up debt in order to keep their joint expenses being paid." Couples need to discuss what kind of general payment system to put in place, with each partner contributing, preferably pro rata based on incomes, she says.

There tends to be a gender difference around paying debt, according to Bross, who says a woman often will pay a man's debt, while men often won't do the same for women.  "Women are trained to take care of others' needs," she adds. "It isn't necessarily loving to bail someone out of a situation they've gotten themselves into."

The debt can wind up causing ill will later. "I don't necessarily recommend that someone just pay off the debt unless there's a true surplus of funds because it sets up an odd dynamic," Bross says. "Money's about power, so there's a power shift at that point." Couples should work together on the debt plan so one person isn't "solving" the problem, says Bross.

3. Keep vital financial documents and consider a prenuptial agreement.
Few people like to think about the possibility of conflict down the road when they're preparing to walk down the aisle, but it makes sense as a practical matter.

Keep financial statements from your most recent days as a singleton so you'll have a record of what assets and liabilities you're bringing into the marriage, Bross advises. Not only could they be relevant in case of divorce, but they might come into play in other marital conversations, such as one surrounding a spouse who wants to cut back on work hours and stay home with the children.

"I just find it's really convenient to have kept those documents for a variety of reasons," says Bross. "Marriage is a financial contract. ... You want to have a clear picture of what you started with."

A prenuptial is another option, especially in a second marriage, even if it's only an informal document that recognizes the debt and what the partners plan to do with it, she notes.

4. Consider postponing the wedding if the debt is causing concern. If a partner has big debt, says Barr, "My suggestion would be don't get married until you both have done the therapy work about the roots of your relationship with money." Debtors who haven't done that work will keep repeating their behavior, she says. "They'll go back in debt again even if they won trillions of dollars."

Those marrying debt-laden partners also need to understand why they're willing to take on that situation, says Barr.

For those going ahead with a wedding, Plechner suggests that couples consider whether they can have a special day without increasing their debt.

5. Keep your funds separate.
"You don't commingle [money], don't open up joint credit cards and don't open up joint bank accounts," Plechner says. Money in a joint account becomes a joint asset that can be used to relieve the obligations of the indebted spouse, he says. "By keeping things separate, you are delineating your assets and your debts from your spouse."

Plechner advises his clients not to co-sign loans, even for family members. A co-signer is on the hook for that loan if the person being helped stops repaying the debt, he notes. "I think people do it casually and they don't really think through what it means."

We all have a relationship with money that is deep in our unconscious even if we think we know all about our relationship with money.

-- Judith Barr
Financial psychotherapist

Understand that in most cases, your spouse's premarital debt won't legally become your debt simply because you got married, according to Plechner. Your credit score won't be damaged, either, simply because you married someone with debt. 

If a partner's debt, however, indicates how he or she will borrow and spend in the future, you might want to know whether you live in a community property state or common-law state. In community property states, a husband or wife is on the hook for a spouse's debt, including business loans, even if he or she was unaware of the debt.

In common-law states, as long as assets aren't commingled and the spouse doesn't co-sign for a loan, the husband or wife generally wouldn't be responsible for the other's debt taken on during the marriage, he says.

Even though you're unlikely to be legally liable for your spouse-to-be's premarital debt, no matter which U.S. state you call home, it nonetheless could affect your finances and relationship.

How a couple deals with that premarital debt can show whether the pair has in place the ability to compromise and cooperate. "Parenting and money," says Bross, "require all of your couples skills."

See related: 5 financial tips for the newly engaged, Overcoming financial infidelity

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Updated: 01-19-2018