Debt and assets commingle in marriage
Marriage, Money, and Debt
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. While one may balance their accounts daily, another may wait until the end of the week to do so. 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.
Unfortunately, misunderstandings about money in marriage lead to frequent arguments and frustrated feelings. In order to avoid such clashes, smart couples engage in discussing and creating realistic plans about how they will manage their marriage, debt and finances. 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. After marriage, debt that a person acquired beforehand is not automatically attached to a new spouse. However, depending upon how finances are handled after marriage, a new spouse can feel the sting of their spouse’s former debt. For instance, if couples commingle their assets after marriage, a creditor can attach those assets in an attempt to collect on any premarital 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. If a couple has a joint tax return, they may be surprised to find the return is not what they expected at all.
