Ever since the life insurance talks I've been wondering about debt. You all were kind enough to let me know that as an unmarried person, I can get hit by a bus and no one will be on the hook for my student loan.
But let's say I'm a lawyer, and I have $100K of student loans. Let's add $10K in credit card loans, just for the sake of argument. And let's say I get married. This is all debt I accrued before I met Mr. Right, okay, and then let's say I get hit by a bus, and I don't have life insurance. Was marrying me the absolute worst decision Mr. Right could have made? Because, not only does he have to pay for a funeral, but he's on the hook for my debt, right?
This is a morbid hypothetical, of course. But it does bring to light some serious questions – does a prenuptial agreement cover debts in the case of death? What happens, then?
Now, I'm not engaged, and I'm not seriously in debt. I will definitely be 100% debt free before I am married. But I wonder, do people consider this when they get hitched?
Debt and Marriage
The bottom line is that debt and marriage is a tough one to dissect, but here are some general rules:
- Debts incurred before marriage, and in a single individual's name (i.e. no cosigner), will always belong solely to that individual
- Any debt that has a cosigner, regardless of when it was incurred, is owed by everyone that signed the loan papers
- Credit card debt is the tough one – many credit card agreements state that both the user and spouse are liable for any charges and balances on the card/account
- Federal student loans are always discharged on death of the borrower
Do people think about these things before they get married? It's definitely something to remember, especially if you're going to be taking out a lot of debt early in life. My coworker's wife is a doctor, and she makes a ton of money. But they also have over 200k in student loans to pay off. This is fine, because she's working and paying those off. However, she does have some private loans, and so he would be on the hook for those (since he cosigned) if she died.
I guess the moral of this story is that getting your debts squared away before becoming a legal unit with your beloved is still a very good idea. Plus, there are a lot of unscrupulous debt collectors that will try to take advantage of you should your spouse die in debt. Many people give in just because they don't know the rules and don't want to deal with the hassle.
What are your thoughts on debt and marriage?