Should Couples Combine Their Debt Load?
Every once in a while, one member of a married couple runs up a lot more debt than the other, sometimes even while just living together. This begs the question as to whether, in extreme circumstances, couples should define whether one or the other should get financial help or if they should go into it together.
There are times when couples don’t have a choice. If they purchased a home with both names on it, then both will always be responsible. If taxes were filed as a married couple both parties are responsible. In this day and age co-signing a car loan or any other type of loan means both parties are responsible as well.
Credit card debt used to be a different story. Back then, unless one party passed away, the husband or wife wasn’t responsible for their spouses debt. If the debtor got sued and had wages garnisheed, it only affected the person whose name is on the account.
Unfortunately that’s changed. When it comes to debt owed after a death, now it’s the full estate that’s responsible for any remaining debt and not just the person who accrued it. The only time that changes is if one of the spouses had an incorporated business, in which case the spouse isn’t responsible for any of it.
Should couples combine their debt load? Absolutely, for these two reasons.
One, if you hope to remain a couple it’s probably the thing to do because it could cause resentment by one or the other. Imagine getting married to someone only to learn afterwards that they’re over $20,000 in debt. Being married is hard enough without having been slapped in the face with that kind of situation.
Two, it helps because both parties in the relationship could get one blanket deal that could end up saving them money while getting the debts of both people paid off. This obviously works better if it’s a married couple, but combining both incomes and the load of debt would definitely be easier to overcome with some good budgeting assistance.
It’s also easier to get a loan from the bank if the household income is combined, as the higher the income the easier it is to get a loan of some type, even if it’s just a line of credit. This also works for getting credit cards, since the question isn’t “how much do you make” but “what is the annual household income”?
Before getting married discussing the debts each person has is an imperative step. All debts should be out in the open before getting married because one or the other could find out that their relationship is a sham and based on financial needs, and that will just add a layer of complication that no one needs to deal with.
I know of one couple where both parties decided to live together. The woman in the relationship revealed a long list of debts she’d been afraid to own up to. Luckily, her partner was very savvy when it came to budgeting and finances. He helped her figure out exactly where she was, how they could proceed to get her caught up, and was also able to figure out how he could help her pay off some of her debt sooner by using a portion of his own income. Within 18 months it was all taken care of, and they concentrated on their future instead of their past.
In the end, couples have to trust either other with their finances in order to try to move forward smoothly. It always works better when people come from a position of honesty, and it could result in figuring out how to solve problems together. That’s what being a long term couple is all about.