Are you responsible for your partner's debt?

Debt is no joke -- and when it comes as a surprise from your significant other, it can be hard to know how to cope. Get the facts on whether you're legally liable, and how to protect yourself.

By Renee Sylvestre-Williams

Caren* still gets indignant when she thinks about her former fiancé. She thought they'd talked about all their financials, but it turns that despite his great credit rating, he was hiding a great deal of debt from her.

Apart from the lying -- not a great way to start a marriage -- her main concern was that she would be responsible for his debt should anything happen, such as divorce or death. After all, we've all seen the movie or read the book. The husband dies, leaving the widow up to her ears in debt that she absolutely has to pay or she'll lose the house/business/farm.

Who's really responsible for debt?
So are you really responsible for your partner's debt, consumer or otherwise? It turns out Caren shouldn't have worried, according to Murray Maltz, a lawyer who specializes in family law.

For example, he says, "Let's say my wife is a secondary user of my credit card. I want her to have access to credit for grocery shopping, etc. However, the liability of the card is entirely mine." Maltz explains that unless you have guaranteed your partner's debt (and that means in writing), then you are not responsible for his or her debt obligation.

This also applies in death. If your partner is in debt when he or she has passed away, you are still not responsible for that debt. What happens is that creditors have to be paid first before the surviving partner can get any assets from the estate.

Sounds good so far. But how can you minimize your involvement in your partner's debt?

1. Have the talk
Yes, the talk. You or your partner may not want to talk about your debt, but being truthful and honest in the beginning will prevent horrible surprises later on, say, like a broken engagement.

2. Be careful what you sign
You are not obligated to take on your partner's debt if you don't want to. As Maltz says, you have to acknowledge or guarantee the debt before you become responsible for it.

3. Decide who will own which assets
Does it make sense to have the house in both names, or just in the name of the partner with less debt? Your decision could affect what happens to assets should something happen.

4. Decide how you will pool your smaller assets
Will you have a joint bank account and credit card? Who will be responsible for the card and for monitoring the bank account? 5. Determine a payment schedule

While you aren't legally responsible for your partner's debt unless you guarantee it, you may want to help pay it down as you work toward your joint future of home, children, travel, cottage or whatever else you're aiming for. This could mean setting some guidelines such as cutting up unnecessary credit cards and living on a defined budget.

Debt is scary and finding out about your partner's debt can be terrifying. As Caren found out, it's never good when one partner lies to another, especially about money and debt. By working together, both of you can get what you want: a debt-free future.

* Name has been changed.

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