Debt, Marriage, Lawyers, Guns and Money
During the course of a marriage, debt is often a major issue between spouses. Prior to tying the knot, most people have developed their own habits of saving money, budgeting, paying bills and spending, in general. One may balance accounts daily, others might do so weekly. One person may prefer to have their bill payments automatically debited from their checking account, while the other prefers to mail their payments. Methods of spending and budgeting might have worked before marriage, but afterwards may not in the least.
Misunderstandings about money can lead to arguments and frustrations in a marriage. To avoid these conflicts, smart couples discuss and create realistic plans about managing their marriage including finances and debts. Some people even get a prenuptial agreement, and get acquainted with federal and state law concerning marriage and the commingling of assets and debts.
Here are a few of the most common concerns about marriage debt, joint finances and assets:
If one spouse had bad debt prior to marriage, does their new spouse become automatically liable for this debt, too?
No. Post marriage, debt that someone incurred previously isn’t automatically attached to their new spouse. Depending on how the finances are handled after marriage, new spouses can feel the sting of their partner’s debts. For instance, commingling assets after marriage can lead a creditor to attaching those assets in order to collect on a debt. Also, the IRS is empowered to place a lien on any refunds due to a person because of unpaid taxes, student loans or other government loans. In cases where a couple has filed a joint tax return, many are surprised to find out that the refund they were expecting is reduced or will not be received at all.
If one spouse incurs excessive debt after marriage, are both spouses liable?
Maybe. Mostly, a firm answer depends upon the state in which the couple resides. Also, if one spouse files bankruptcy as a debt management strategy, creditors can pursue repayment from a non-filing spouse if the two were legally married at the time that the debt was incurred. Debt liability is a risk to a marriage. However, couples can better arm themselves against such risks by knowing what state and federal laws have to say about any potential issues pertaining to marriage, debt liability, and joint assets.
How do the courts view real property that a spouse owned before marriage?
Typically, property owned before marriage is considered separate property of the individual who held it prior to the marriage. However, if the non-owning spouse ever contributes their own money toward mortgage payments, repairs to the property, general maintenance or helps make improvements to the property, or if this spouse has free access to the property, the courts may then view the property’s ownership a little differently. Again, this depends on the state in which the couple resides, how long a couple is married, as well as the specifics regarding the time and money that the non-owning spouse put into the property.
Financial considerations are involved in a marriage, as well as debt and commingling assets, and they have to be discussed by people considering spending their lives together. These issues present obstacles to some, but people that aren’t afraid to discuss and plan for them find they fare a lot better as a result. Couples that sign prenuptial agreements or are familiar with the applicable state and federal laws about debt, marriage, and protecting assets, these issues aren’t a surprise.
