Being Responsible for a Spouse’s Debt – What to Know

Marriage is more than a union between two individuals; it is also the union of responsibilities, assets, and potentially debt. Finding out that a future spouse carries a shocking amount of debt may leave one wondering how it will affect their credit and finances, mainly if they have worked hard to maintain a high credit score. Additionally, taking on a spouse’s debt may significantly impact a married couple’s financial and emotional health, making it crucial to find out as much as possible about the individual and joint obligations involved.

Those who are about to get married and reviewing how their financial situation will change may be wondering about the kind of debt they will inherit, the impact on their credit score, and how they can protect themselves and their partner. Here are a few important things to know:

Being Responsible for a Partner’s Debt

A person can bring debt into a relationship in many ways, such as student loans, car loans, credit card debt, and mortgages. Once a couple officially combines their lives through marriage, they must outline who is responsible for debts incurred before the marital union. 

The individual debt one has incurred will be charged only to the person who signed up for it. In short, loans under an individual’s name make only them responsible for paying it unless their partner chooses otherwise. That means partners are not obligated to repay each other’s debt before the marriage.

However, things change after getting married or becoming common-law partners. The couple can then decide to combine incomes and debts to decide on all financial matters together. This choice involves incurring joint debt, like a mortgage, on top of individual debt such as student loans. To avoid incurring more debt than what can be feasibly paid, it may help to work with debt consultants in Canada.

All About Joint Debt

Joint debt occurs when a married couple signs a legal agreement to share responsibilities for a debt or financial obligation. Lenders may ask both individuals to sign a loan as co-borrowers, whereas in other cases, one will be the borrower, and the other will co-sign and act as a guarantor. Regardless, both are equally responsible for complying with the loan’s terms and conditions. It is also possible to combine pre-marital debts through a debt consolidation loan in which the married couple will agree to shared responsibility for the loan’s terms.

How a Partner’s Debt May Affect a Credit Score

A spouse’s individual debt, incurred before the marriage, will not affect their partner’s credit score. However, joint debt will impact one’s personal credit score, making it essential to pay all obligations on time. If one spouse stops making payments, the other must deliver on their behalf if they are interested in maintaining their credit score. Additionally, a spouse’s loans that their partner did not sign for will not affect their partner’s credit score. One thing to keep in mind is that a spouse’s low credit score may impact their partner’s application for joint credit. 

Protecting Oneself and the Partner

It is crucial for a married couple to regularly discuss money matters and avoid complicated situations that can plunge them further into debt. Some couples deal with a combination of pre-marital debt and joint debts that they took together after getting married, while others choose to separate them. Couples can protect themselves by understanding each other’s spending habits, meticulously tracking credit and debit details, and staying on top of all obligations. It can also help create a spending plan and budget together so both partners know how much they are spending and what they can afford to save.

Conclusion

Married couples share more than their lives. They also share their financial obligations should they choose to do so. By being aware of all the implications of joint debt and how it affects one’s credit score, a couple can manage their financial matters expertly.

DebtHelpers.ca is a team of debt consultants in Canada offering personal debt solutions and a range of consulting services. Intending to help Canadians reach their goal of becoming debt-free, the company provides clients with customized plans. Get in touch today for a free consultation.