Tomorrow is Valentine’s Day and for all you romantics out there, don’t let debt stand in the way of an epic proposal or getting hitched on V-Day (or any other day)!
THE INHERITED DEBT MYTH
As an admin to several student loan related Facebook groups, people often have questions pertaining to debt and marriage. They still seem to think that once you’re married, your spouse will inherit your debt and vice versa. This is not necessarily true! As long as your spouse does not co-sign for anything with you, they are not responsible for your debts.
The exception is if you live in a community property state (California, Nevada, Washington, Idaho, Louisiana, Arizona, New Mexico, Wisconsin and Texas) any debts incurred prior to the marriage will remain separate, however any debts either you or your spouse take out after you are married will fall on both of you. I’m no expert, but I do believe community property states allow you to sign an agreement to keep your debts separate.
Some couples choose to combine their debts/finances while others choose to keep them separate. Either way you choose to handle your debts/finances, it is important to be open about them! Hiding things is never good in any relationship. Every couple is different and has to do what works for them!
My husband and I have been married for two years and, for the most part, keep our debts separate. Aside from the credit card we used for a California trip last year, we each had our own debts prior to even knowing each other existed. We were open about our debts from the start and made it clear that we did not want the other to pay for it. Should either of us cease to exist, the other will not be responsible for debts they did not incurr. I warned my husband that Sallie Mae might try to take advantage of a mourning spouse and say he is responsible for my loans upon my death. His name is not on my promissory notes therefore he has no obligation to pay off my debt. Make sure you know what you will be responsible for should the unexpected happen.
When we got married, we decided to open a joint bank account and my husband had me open my own checking and savings account. I don’t really use my account often, except to write checks for rent or medical bills as my husband never ordered any for the joint account. I keep another personal bank account only because my father and co-signer deposit money into a local branch to help pay my private student loans. I know my husband has another bank account somewhere in California that he no longer uses (that he should have closed or stopped the paper statements!). We’re a combination of joint and separate in our finances and it works for us.
STUDENT LOANS AND MARRIAGE
When it comes to student loans and marriage there are a number of factors you need to take into consideration.
- Repayment plans such as Income Based Repayment will factor in your spouse’s income if you file a joint tax return. If you file separately, then only your income is calculated in your payment.
- If you file separately you lose certain tax deductions, like the student loan interest deduction. (There may be others I’m not aware of, I am no expert so consult a professional for more information)
- If you default and file jointly, your tax returns can be seized. Be sure to file as an Injured Spouse to ensure you still receive your portion of your tax return should you choose to file jointly.
TIL DEBT DO YOU PART
Debt and marriage can work. You’ll probably have more success paying off debt faster if you combine your resources rather than paying separately, but I feel strongly for paying for my own mistakes.
I am currently unemployed but any income I do make will go entirely towards my debts until they are completely paid off. My husband’s income supports me 100% in all other areas (health, food, shelter, clothes, furbabies). He knows this and it’s one of the reasons we got married so soon. (Our story to come soon!) I was about to lose my father’s health insurance coverage. As a brain tumor survivor, health insurance is something I can’t go without. Thanks to my loving and kind husband, I now have great insurance and know that he will continue to support me no matter what life throws at us.
Happy Valentine’s Day or Singles Awareness Day, however and wherever you celebrate!