For practical reasons, and in the event that the relationship falls apart, monetary obligations between spouses should be separate from the onset.
When two people get married it does not have to mean that they should also share or inherit each others' debts and credit history--unless they really want to.
If that is the case, as required by the law, the couple has to apply for joint credit.
Their individual debts and credit history will continue to be separate but their joint debts will appear on both of their reports.
This means that if the husband has a poor credit history but the wife has a good credit history, the husband's credit will not have a negative effect on the wife's credit history.
What is joint debt? Joint debt is when the consumer takes out and signs a joint credit agreement (like secured and unsecured loans, mortgage, joint bank accounts, joint tenancy, council tax, etc.
) with another person.
This means that both parties are liable for the repayments of the money borrowed.
How does it mean for the consumer to sign a joint debt with another person? It means that the consumer is not only responsible for half of the money owed because as far as the creditors are concerned-- both parties are equally liable for the full amount that they took out.
Sometimes couples take out a loan when the relationship is smooth sailing, confident that they can pay it together, but when something unfortunate happens such as a bad split, a serious problem of "who is going to pay now?" arise.
How difficult the case is going to be depends on the nature of the relationship.
Sometimes one partner refuses to make any contributions to the repayments so it leaves the other partner to shoulder everything.
Again as far as the creditors are concerned, the agreement is that either or both of the parties are liable for the debt, that if neither or both consumers fail to communicate their plans with the them, they (the creditors) are going to go after either or both of the partners to collect, even if it reaches the court.
Another issue that may arise from a bad breakup is when one of the consumers decides to file bankruptcy.
If the court approves his/her petition that would free him/her from all the liabilities.
He/she will be released from all legal obligations to repay the debt which would leave the other partner in the cold to take full responsibility for their debt.
Can those issues be prevented from happening? The consumers are advised to keep their credit separate no matter how much they love and trust one another.
It is a fact that there are no perfect relationships in the world, that no matter how great the relationship may seem to be now, at some point in the future, the couple is going to encounter a misunderstanding.
Unfortunately in many cases, the misunderstanding, aside from infidelity, is caused by money.
Maintaining separate credit accounts in marriage, although a little hard to execute, as sometimes couples need to purchase a home or any other properties together, is advised.
When couples apply jointly the lenders would look at both of the couples' credit history and income.
If one of the spouses has a good credit and the other has a lousy credit, the spouse with the poor history may drag down the application as the creditors would tag them as high risk.
What is its significance? It means that the creditors may slap them with a higher interest rate.
It seems ideal for couples to consider leaving behind the old tradition of sharing all their debts and assets in marriage, and if it is true that money causes many relationships to fall apart-- keeping the finances separate makes sense-it is just not that simple to execute.
Even if being responsible for one's own debt might make life together more efficient and less adversarial, the state (Community Property States) in which the couple lives in still has the last say.
What about the community property state law? Community property states like California, Texas, New Mexico, Washington, Arizona, Nevada, Los Angeles, Louisiana, and Wisconsin require that any debts (or assets) acquired by either or both spouses during the marriage are equally split between them.
If both spouses possess the title to an asset, then each owns half of the interest.
The technicalities or the law would not even matter if the couple stays married forever, but if that is not the case, or if a separation or a divorce suddenly crops up, then the technicalities and the law would suddenly become critical.
It should be well understood how much stress money and property matters place on a marriage.
Nowadays, couples have open and honest discussions about money before they get married, as the phrase "nothing lasts forever" is becoming more of a reality than just a mere saying.
If the consumers find themselves walking in the path of divorce, it is strongly recommended that each spouse obtain a credit report before the divorce proceedings begin.
It will help the couple see what debts they have filed jointly and separately.
It would also help them compare scores and check for reporting errors, correct them while they are still in the same situation, so they can move on with their separate lives eventually.
Divorce proceedings can be lengthy and messy but both spouses should contain their emotions long enough to take care of technicalities like the closing of any joint credit and bank accounts-it is important to prevent anymore post-divorce issues from arising.
That way even if the account is already closed and even if both consumers are still paying off the debts from those closed accounts, further charges or withdrawals from either or both are no longer going to be possible.
Debt is to man what the serpent is to the bird; its eye fascinates, its breath poisons, its coil crushes sinew and bone, its jaw is the pitiless grave.
- Edward George Earle Lytton Bulwer-Lytton, 1st Baron Lytton