Are you liable for your spouse's debt? A legal and moral dilemma
You’re three years into a loving marriage, everything’s going great; you’re both happy, healthy, and ecstatic about the future.
And then you’re rocked by an all-too-common financial surprise.
In your quest to purchase your first house, you discover your spouse has been hiding substantial debt. So much, in fact, that you’re forced to pause your home ownership aspirations.
Too embarrassed to tell you, your spouse has kept this secret hidden during your entire marriage. In fact, the debt began accumulating years before you ever tied the knot.
You love your spouse and dream of owning a home.
A bombshell has just been dropped.
Naturally, you’re angry and upset. It’s tempting to fly off the handle and spew recriminations, but instead now’s the time to take a few deep breaths and assess reality.
Hidden debt among spouses is likely more common than you realize. After all, most people don’t broadcast their financial woes.
Once you’ve had a chance to collect your thoughts, an honest and open chat with your spouse is critical. You want to understand the type and extent of the debt and, perhaps as important, the cause.
Not all debt is created equal. Streaks of bad luck and questionable past decisions can haunt people. Give your spouse a chance to explain. You might find you’re sympathetic to their situation.
So, is it okay if you pays the debt in a relationship? And are there times when doing that is a bad idea?
When do you HAVE to pay your spouse’s debt?
Forget romance. Let’s talk legalities.
As you might guess, there are times when a spouse is absolutely obligated to pay the debt. This has nothing to do with the sanctity of marriage and everything to do with the law.
- Timing: Depending on when the debt was incurred, the law may or may not view it as a joint obligation. For example, debt incurred during a marriage is more likely to be considered joint than debt accumulated long before the couple met.
- Type: The type of debt can also affect who’s responsible. Mortgage debt, for example, is more likely to be considered joint debt than debt accrued on a credit card (assuming the spouse did not cosign the card).
- Marriage structure: The structure and jurisdiction of the marriage can affect who’s responsible. In community property states like California, regardless of who initiated the borrowing, both spouses are usually responsible for any debt incurred during the marriage.
Debt obligations vary widely. These are just some circumstances that can help determine who’s responsible. Ultimately, each couple's legal situation is unique.
When SHOULD you pay your spouse’s debt?
This is a much trickier and more subjective question than the former one.
There are two parts to this, one practical and one moral.
From a practical standpoint, it’s mostly math. If you have the resources and are happily married, it likely makes sense to pay the spouse’s debt—legally obligated or not.
After all, it’s a partnership.
Of course, you may be happily married but don’t possess the resources to help. In this scenario, you shouldn’t pay your spouse’s debt because you could end up underwater yourself.
Sometimes, paying your spouse’s debt may make personal financial sense. If the debt will prevent you from purchasing a property together, it might be wise to help pay it off.
However, it’s not just a practical matter. For some, paying off their spouse’s debt is a question of morality. If the secrecy surrounding the debt drives you toward separation, you may not be inclined to help.
It’s also possible this isn’t your first time discovering hidden debt. Rather than enabling the behavior, you may decide it’s healthiest to let them solve the challenge independently.
Tough love, so to speak.
In other cases, happy or not, you may view the debt obligation as your responsibility as one-half of the marriage partnership. Much of this will depend on your values and history with your spouse.
Regardless, all these scenarios assume these options are legal. Often, the law, not what you desire, determines the outcome.
Even if the hidden debt leads to divorce, in the eyes of the law, the other spouse may still be responsible for a portion of the balance.
Practical considerations—tactics for dealing with debt as a couple
You discovered your spouse’s hidden debt and have had some tough conversations. You empathize with their situation, love them, and want to help solve this financial burden.
Great, now what?
Make a plan
It’s unfortunate this debt dropped on your plate, but there it is and you’re committed to tackling it. After you’ve had a chance to assess the extent of their burden, it’s time to make a game plan.
Write down ways to reduce monthly expenses and generate additional income. Consider expensive habits that can easily be avoided.
But before beginning this stage of the process, mentally prepare for a potentially charged conversation.
Depending on the debt’s complexity and size, connecting with a financial advisor may be helpful. They can devise ways to tackle this challenge together. And including an objective third party is also beneficial when discussing delicate matters like finances.
Naturally, you want to avoid this happening again in the future. Drawing up clear boundaries with your partner can help. The goal is transparency and accountability.
An example of a boundary might be prohibiting either partner from making a purchase over $200 without the other’s consent.
Revisit the conversation
Developing a plan is one thing. Sticking to it is an entirely different matter.
Revisit your financial plan regularly. Use the opportunity to share financial updates and comment on what’s going well and what isn’t. You might discover additional opportunities to save money or earn more income than you initially thought.
And don’t worry. Over time, the discussions will become easier and more effective.
There’s no way around it; debt is a touchy subject. The sooner you learn the full extent of your spouse’s burden, the sooner you can help resolve it—if that’s your goal.
Regardless, staying as cool, calm, and collected as possible is helpful when you first learn the news.
No doubt, easier said than done. But you can do it.