If your debts are not joint debts, it does not affect you. You are not responsible for your partner's personal debts. However, if you have joint debts (like a loan in both your names), you become responsible and it's up to you both to pay them.
However, it's not all wedding parties, but also about the more serious issues related to sharing a life together, like your finances. According to relationship support provider Relate, 25% of people who have been in debt say that it's had a negative impact on their relationship.
When one or both partners have debt coming into the marriage, the debt belongs solely to the person who incurred them. 1 Say, for example, you have $15,000 in private student loans in your name. Your spouse-to-be has $10,000 in credit card debt in their name.
Debt negatively impacts relationships. Nearly 40% of couples skip date nights due to debt. Some people have such negative feelings about debt that they will do anything to avoid it—even avoid marriage.
Generally speaking, you'll only have to pay your spouse's debt on joint accounts. So, if you have a joint credit card, bank account, or mortgage, you're liable for the entire debt. Important: If your spouse's income stops, you might consider refinancing joint loans to cover the expenses yourself.
Not to worry, a prenup can protect you against your partner's poor debt decisions. How? Well, you can make sure to outline in your prenup that all premarital debt (debt accrued before the marriage) and marital debt (debt accrued during the marriage) remain the person who borrowed its debt.
One spouse's premarital debt does not automatically become the other's upon signing a marriage license, but that debt can still affect you after marriage, as it affects your joint finances.
The stress from debt can lead to mild to severe health problems including ulcers, migraines, depression, and even heart attacks. 2 The deeper you get into debt, the more likely it is that you will face health complications.
Debt can be a source of stress in any relationship and a catalyst for breaking up. According to USA Daily News, almost 50% of Americans believe debt to be a significant contributing factor to breaking up, including divorce.
Debt liability in common law states
If your spouse owns a credit card that is solely in their name, you are not liable for their debt. But creditors do have recourse to your spouse's share in any assets that you own jointly with them. And if you are a joint account holder on a credit card, both of you will be liable.
First things first: You need to have an honest conversation about whether your new spouse really does want to improve their credit or pay down their debt. It's work — hard work, and they may need to make big sacrifices or change deeply ingrained bad habits.
Credit scores are calculated on a specific individual's credit history. If your spouse has a bad credit score, it will not affect your credit score. However, when you apply for loans together, like mortgages, lenders will look at both your scores. If one of you has a poor credit score, it counts against you both.
Don't let debt become the big, bad wolf in your storybook romance. As you and your partner plan for your nuptials and beyond, make sure you discuss any debt from before your marriage and, if it makes sense for your situation, put a plan in place to pay it back before the big day.
Marital debt is basically defined as debt incurred during the marriage and before the date of separation by the spouses for the benefit of the spouses.
Key takeaways. Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.
Most lenders say a DTI of 36% is acceptable, but they want to lend you money, so they're willing to cut some slack. Many financial advisors say a DTI higher than 35% means you have too much debt. Others stretch the boundaries up to the 49% mark.
One guideline to determine whether you have too much debt is the 28/36 rule. The 28/36 rule states that no more than 28% of a household's gross income should be spent on housing and no more than 36% on housing plus debt service, such as credit card payments.
If you're in a serious relationship – especially if you're married, living together or considering it – then you should let your partner know about your debt as soon as possible.
In an ideal partnership, if both the spouses are earning, they should contribute to the household expenses or finance joint assets in the proportion that they earn.
If you're hiding debt from your partner
Trying to deal with the situation on your own by keeping it secret will probably only make the stress feel worse. If you have debt that you're hiding from your partner, tell them about it as soon as you can. The sooner you have the conversation, the easier it will be.