question about debt and marriage

[alexandria35]

I have a general question about money and marriage. I thought about posting it on the general board but that board is such a circus and I think half the people on there are teenagers or very young adults.

 

I have a friend who is going to get married. She has never been married and neither have I which means we're both very ignorant about the ins and outs of marital debt and finances.

 

She is not well off but she has virtually no debt. She lives within her means and doesn't spend what she doesn't have. She lives very modestly because not accumlating debt has always been important to her. He (guy she is getting married to) is the total opposite. He has about fifteen thousand dollars owing on credit cards and he will be making huge payments on a new truck that he bought a year ago. $700 a month for the next 6 years. I have no idea what the truck is worth outright but on his current financing he will have paid $60,000 by the end of his contract. I think it's the most idiotic thing I've ever heard off. He's an okay guy but he is a total idiot when it comes to money. He constantly buys things he can't afford and lives beyond his means. He as agreed to let her take over all of the finances and budgeting because he knows he sucks at it and he needs help. At least this is what he says now but I don't know if he will really will let her take control. I don't trust him.

 

Which brings us to my kind of dumb question because I don't know anything about marital debt. Now she and I both know that any debt accumulated during the marriage will fall on both of them, but what about the debt that he brings into the marriage? By marrying him now, will she be on the hook for his credit card debt and his truck payments even though she had nothing to do with accumulating those charges and her name is not on the credit cards or the vehicle contract? What steps can she take to protect herself? She doesn't think he will agree to a prenup which I know is a big red flag in itself, but since it looks like she is going to marry him I am interested in what she can do to protect herself. They are not young and I don't want to see her left financilly ruined by this guy. If he destroys them it's not like she will have years and years to rebuild.

[Balzac]

Premarital debt and assets differ from marital. What state are you talking about?

 

She needs to become informed and know the rules about commingling funds.

[Radu]

In both of your cases i would highly advise you keep separate finances from your future spouses.

 

Debt [in marriage] is like STD, financial STD.

My cousin made this mistake to marry a girl who earned more but who was utterly clueless about having control of her spending ... she is in huge debts for the next 28yrs because of this.

 

Talk to a lawyer/accountant in your state, especially this question ... can a spouse rack up debt in the name of both of the spouses without the written consent of the other spouse ?

I'd even go as far as to consider a prenup.

 

And look up financial infidelity, i would search these 2 guys top to bottom for debt they keep secret.

Edited June 16, 2012 by Radu

[alexandria35]

Um, theres only 1 guy. I'm not getting married.

 

I did do a brief search about marital laws in my area (I'm in Canada. I didn't find much but I did find a blurb about both spouses being held responsible for any debt that carries both of their names, which leads me to believe that she will not be in any way responsible for his premarital debts as long as she doesn't allow her name to be put on his credit cards or his vehicle. I will keep looking for more information but hopefully this is the case.

[Art_Critic]

Shouldn't you let your friend figure out what is right for herself on her own..

Honestly.. their finances are none of your business and it seems you are butting in where you shouldn't.

 

JMO

[carhill]

Agree with Art and, if asked personally, would recommend PMC and a pre-nup to address the differing financial styles.

[alexandria35]

Shouldn't you let your friend figure out what is right for herself on her own..

Honestly.. their finances are none of your business and it seems you are butting in where you shouldn't.

 

JMO

 

Well thanks for that.I didn't stand over her and demand to know things about her or his financial life. She told me the circumstances, expressed her concern to me and asked me if I knew anything on the subject. I told her honestly that I don't know but If I found out anything I would get back to her. That was about the extent of it. I didn't judge her or question her or give her any opinion at all really so I would hardly call that butting in. Thanks for giving your opinion based on your assumptions which are no where even close to the truth.

Edited June 17, 2012 by alexandria35
spelling

[Art_Critic]

Thanks for giving your opinion based on your assumptions which are no where even close to the truth.

 

My opinion was based on what you have posted in this thread.. assumptions.. maybe but I don't think so.....

 

When you told her that you don't know anything why didn't you just drop it ?

 

I still think their financial issues and especially his are none of your business.

I have on occasion told a friend or two of mine that something was none of my business when they broached a subject that I felt I didn't need to know.

 

and by the way... you certainly have judged him..or it seems you have from what you posted, I don't think she should have told you his business and maybe you should have just told her something to that effect...

 

I'm not trying to crank down on you.. just telling you that something isn't your business when I feel it isn't isn't coming down on you.. it is merely giving you my opinion.. you are free to take or leave it as such.

[alexandria35]

My opinion was based on what you have posted in this thread.. assumptions.. maybe but I don't think so.....

 

When you told her that you don't know anything why didn't you just drop it ?

 

I still think their financial issues and especially his are none of your business.

I have on occasion told a friend or two of mine that something was none of my business when they broached a subject that I felt I didn't need to know.

 

and by the way... you certainly have judged him..or it seems you have from what you posted, I don't think she should have told you his business and maybe you should have just told her something to that effect...

 

I'm not trying to crank down on you.. just telling you that something isn't your business when I feel it isn't isn't coming down on you.. it is merely giving you my opinion.. you are free to take or leave it as such.

 

Okay I didn't mean to get defensive. Perhaps we shouldn't have even had the conversation. Didn't seem odd at the time though. It was kind of like a "hey I'm thinking of buying a toyota corrolla, do you know anything about that car" sort of discussion. I know that a persons financial life is much more personal than what kind of car they buy, but the conversation sort of had that vibe. I'm sure she will look further into the situation herself, I just thought I'd ask here because it was on my mind and I'm sort of curious myself. I suppose I did sound judgemental of him here. The idea of her paying for his ridiculously large and over priced truck when she would never buy anything like that for herself because she is too frugal kind of got me ticked off but I didn't say anything judgemental to her and I hope it didn't show. In the end you are correct that it's none of my business whatever she does and if she brings it up again I will suggest she speak with someone more knowledgeable.

[Art_Critic]

Perhaps you should have said: "In these situations I regard it as none of MY business."

 

But if you really thought it was none of YOUR business...you wouldn't have replied in this thread at all, would you have?

 

.............

[alexandria35]

Perhaps you should have said: "In these situations I regard it as none of MY business."

 

But if you really thought it was none of YOUR business...you wouldn't have replied in this thread at all, would you have?

 

I don't get it. Why wouldn't I reply to my own thread? Did you mean to say that I wouldn't have started the thread?

 

In any case, I actually have gotten a lot better over the years about listening to the merit of other peoples opinions but I'm not perfect at it. Art Critc said something that I initially reacted to defensively but after I gave it some thought I realized that the posters here telling me to stay out of my friends business were correct. I will not involve myself any further in her financial dealings and I will work towards letting go of my judgements and biases on her situation. Not always an easy thing to do but I know it's better for everyones mental health in the long run.

[jwi71]

Per-nup is the answer in my opinion.

My W and I have one and it's sole purpose is to protect assets (we both got raped in our respective D's).

It basically lists the assets and debts that each brings in and that those are the separate property of the debts owner (either solely hers or mine). We also have three accounts, one is my separate property, one is her separate property and the last is marital property.

 

It works just fine for us and completely eliminates fiduciary issues.

I actually rather like the arrangement since I can spend my separate property money on whatever I like

[alexandria35]

Per-nup is the answer in my opinion.

My W and I have one and it's sole purpose is to protect assets (we both got raped in our respective D's).

It basically lists the assets and debts that each brings in and that those are the separate property of the debts owner (either solely hers or mine). We also have three accounts, one is my separate property, one is her separate property and the last is marital property.

 

It works just fine for us and completely eliminates fiduciary issues.

I actually rather like the arrangement since I can spend my separate property money on whatever I like

 

If I were to ever get married this exactly the arrangement I would want. It's not out of selfishness or distrust, I just think this kind of set up would eliminate a lot arguments over money. When you combine everything, assets, debts, bank accounts then it all gets so convoluted and people end up having petty arguments about who spent what? who's paying for what? etc, especially when there are a lot of bills and not a lot of money to spare. I like the idea of it all being clearly spelled out for me. One less thing to cause marital discord and strife.

[turnera]

IF she takes over his bills, she must make him agree to give her access to his debtors, i.e. sign over rights to his bills, so that she has the right to shut down his access to more money, if she sees him spiraling. They should sign something in writing (prenup) before she marries him. I have done this, after I found out my husband had $80,000 in debt. I now pay all the bills and am able to get into his accounts. When a new card replacing an expired one comes in the mail, I don't give it to him.

[16thstreet]

There are a few things that your friend might consider aside from a prenup, which sounds like it is not going to happen in any event in her case. First, she might (if she hasn't already) consider talking in great detail with her fiance about finances. I mean sharing past credit card statements, pay stubs, tax documents, whatever will create financial transparency. If she is going to take over the finances, she needs to have an accurate picture of the situation. If her fiance is spending more than he is making then the debt issue will likely create a major problem for them. If, however, the debt is some legacy debt from perhaps unfortunate circumstances or some past bad decision making then I do not see it as a red flag right away.

 

My partner had about the same amount of debt as your friend's fiance shortly before we eloped. He wasn't proud of it, but it was debt on cards with very low fixed rates (0.99%) that he'd never managed to make a priority and get rid of. And, he too likes new expensive cars. Before we got married he made a commitment to prioritize the debt and start addressing it seriously. That meant that he wasn't going on every guy's ski trip or Vegas trip that he would have previously, and it showed me that he was serious about making some adjustments in life to get to a goal. Within a year of being married we finished paying off his credit card debt. We also got rid of his expensive truck and were a single car couple for a little while (though recently we bought a new vehicle after saving about 40% of the cost for the down payment so the monthly payments are very low).

 

We were able to do this via what I would suggest second. If they do not do this already, I would suggest that he (maybe with her help) set up a budget. A detailed speadsheet works. We mapped out the money coming in for him, the money going out, how much each pay period he had left, and then he decided how much of that he would put toward debt. It was important because it showed me that he was willing to learn to plan, even if he hadn't ever been very good at it before.

 

We have not yet combined our finances entirely, but we are getting closer to probably eventually comingling our fianances.

 

In relationships it is okay to have boundaries and in the case of someone that has a hard time with finances it is okay to have rather strict boundaries (full access to their bank accounts to be able to check balances and more if necessary). It sounds like your friend needs to figure out what her boundaries are BEFORE signing on the dotted line with her fiance and make sure that his are aligned. It is a bad situation where you have someone who is really private or guarded about those things matched up with someone who thinks that the 100% open book approach is the way to go. Better to find out in advance.

 

p.s. I think you are a good friend for asking and for being concerned. She asked you for your advice and when you didn't have much to offer you turned to some place to try to find some. I think it's admirable. It would be different if she hadn't asked or if in the future she asks you to kindly mind your own business.

Edited June 20, 2012 by 16thstreet

[Radu]

Um, theres only 1 guy. I'm not getting married.

 

I did do a brief search about marital laws in my area (I'm in Canada. I didn't find much but I did find a blurb about both spouses being held responsible for any debt that carries both of their names, which leads me to believe that she will not be in any way responsible for his premarital debts as long as she doesn't allow her name to be put on his credit cards or his vehicle. I will keep looking for more information but hopefully this is the case.

 

One thing i know about Canada is that if a spouse has an account/deposit box in their name only, than the other spouse can acces it and empty it without his/her consent.

 

16thstreet has some very solid advice.