Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Dec 23, 2011

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The one thing that can kill the mood of those walks on the beach, fantasies of starting a family, and those times of never ending eye locked moments is if one notices a mountain of debt sitting behind their significant other’s back. For many (particularly the young) this is a trivial matter that can be overseen and worked through, but for others, debt serves as a very real and valid concern.


The good news is depending on the state that a couple resides in, the effect their individual debt has on their spouse may be limited.


Community-Property States

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Community-property states are states that treat marital income differently than other states. They view marital income as a joint income. This is primarily to provide protection to the individuals in a relationship in the event financial disputes or divorce occurs. But this also allows creditors to consider both members of a marriage as a single entity. As a result, if one member of a marriage defaults on a personal loan of theirs—even if that person is the only named and signed borrower on the loan’s contract—creditors can reclaim money from both people in the marriage.


This is of particular importance to couples wherein one individual has a lot of debt, and another individual makes a lot of money. According to Steve Bucci, a debt adviser with, “whatever income the two [married people] accrue while married would be considered community property and fair game for collectors if they need to collect on debts in the future—even the debts that were [acquired] before the marriage.”


In addition to spreading debt (such as student loans and personal loans) out amongst couples, community property states also grant ownership to property upon marriage. For example, if a woman buys property with her name as the sole owner of that property, then gets married, the husband will be entitled to half of the property in the event divorce occurred. This could be bad for the woman if she wanted to retain ownership, or this could be bad for the man if a large balance is still owed on the home loan.


Do Away With Debt


Borrowers may want to consider making a valiant effort to alleviate of themselves of loan debt before entering into marriage. Look into student loan consolidation programs, or set money aside to pay off personal loans before tying the knot.


Meeting with a credit counselor and working on improving one’s individual credit may prove to be a very valuable gift to anybody’s significant other when marriage finally arrives as well.


Regardless, with finances being one of the leading causes for divorce, it’s important for couples to consider the impact a person’s personal loan debt will bring to a marriage before the words “I do” escape either of their mouths.