Financial Teamwork - Wife Pays Husband's Debt
*Anything said here can apply to people of any gender and to any type of relationship
Paying your husband's debt may not have been on your mind when you said, 'I do,' but sometimes that is a decision you have to make.
Financial teamwork creates more peace and harmony in the marriage, so sometimes it's worth paying your husband's debt. But, of course, there are times you shouldn't. Recognizing when you should and shouldn't is important for your financial and marital health.
What to Do When Your Partner Has Debt
If you didn't have the 'money talk' before marriage, you might unpleasantly discover that your spouse is in debt. While it might not be what you signed up for, there are ways to handle it, and those ways may surprise you.
Sometimes it's okay to pay your partner's debt, but there are certain situations that you shouldn't consider it. The key is not to freak out; instead, talk together, and problem solve to get to the root of the problem and find a solution.
Communication and Collaboration Is Key
The best thing you and your spouse can do is talk about money as early and often as possible. This ensures you are both on the same page and can create a plan.
Hiding debt is never a good idea, and requiring that one spouse pay debt another spouse accumulated isn't fair either. Sometimes, however, there are reasons a wife pays debt for a husband that works for both parties, which is why communication is key.
Create a Budget
When you discover your spouse's debt and decide that it makes sense to pay it off, create a budget together. This budget should focus on your monthly obligations and a plan to pay the debt off in a doable timeframe.
Work on the budget together and decide how to allocate your money best. Be sure to include debt payoff, savings, and money for both partners to feel like they have some independence, too.
Should a Wife Pay Off Her Husband's Debt
It's a common debate couples have, especially if you discover your husband has more debt than you realized! Here are my thoughts:
A Common Financial Goal
If you have common goals, and the debt stands in the way, you can help pay it off. For example, if you dream of buying a house, but your husband's debt makes your debt-to-income ratio too high for loan approval, consider paying it.
Also, consider paying off your husband's debt if you can't save for a down payment as fast as you'd like because of it. If paying off the debt will make it easier and faster for you to reach your goals as a couple, consider it.
It also makes sense when you both want to save for a long-term goal, such as retirement, but you're still paying on the high-interest debt. No investment you can make will reliably exceed the interest you pay on consumer debt, so you're better off paying off the debt and then saving.
Debt Is Causing Stress
If your husband's debt causes you or him too much stress, it can hurt your relationship. No one likes to feel constant stress, and it can affect how you treat one another. Knowing that your husband is stressed and can't handle the debt may make you want to help.
Paying on a Cosigned Loan
If you cosigned a loan for your spouse, you might not have a choice but to pay it. If your husband can't pay it, and your name is on the loan, it will hurt your credit if it goes unpaid.
It might not be what you planned, but when you cosigned the loan, you agreed to make the payments if he couldn't. It's not worth letting your credit fall apart, especially if you can afford to repay the debt. Letting it hurt your credit would only negatively affect both of your financial futures.
Community Property Laws
If you live in one of the nine community property states, your husband's debt is yours if he accumulated it while you were married. It may seem unfair, but everything is split 50/50 in community property states, including debt.
This is one situation that makes sense where a wife pays off debt of her husband. Instead of letting the debt go unpaid and ruining your credit or causing marital stress, you can pay it.
In any of these circumstances, whether you consider the money you put towards their debt to be a loan or not is up to each couples to decide for themselves.
When You Shouldn't Pay Off a Spouse's Debt
Just as there are reasons that make sense to pay off your spouse's debt, there are just as many reasons not to do it.
Financial Harm
If you are still determining if the relationship will last, or you feel like your spouse takes advantage of your financial situation, you may not want to pay his debt. This is especially true if you don't have the funds, and paying it will put you behind on your debts or make it impossible to save for emergencies.
Repeating Cycle
If you've already been down this road with your spouse only to find yourself back where you started, you may reconsider helping him again. If he didn't learn the first time and didn't discuss any new debt with you, it might be time for him to face the consequences.
Of course, this only works if you don't live in a community property state, since you're just as responsible as him for any debt acquired during a marriage in those states (at least in case of a divorce). So instead of bailing him out again, consider seeking financial couples therapy where you can create a budget and plan to move forward as a team without accruing more debt.
When You Have Alternative Options
If you know your husband has other options, help him investigate them. For example, if you know he has good credit and might qualify for a zero percent balance transfer credit card or low-interest loan, help him apply.
You could even work out a budget with him so he pays off the debt with the new loan or credit line and doesn't get into debt again. You can also offer to help your husband better manage his money so he has money to put toward the monthly debts, getting out of debt faster.
This may help him 'learn a lesson' and become more financially aware than just paying it for him.
Considering Bankruptcy
If your husband is talking about bankruptcy, it doesn't make sense to waste your assets on his debts. If he's filing a Chapter 7 bankruptcy, they will write off (most of) his debts after exhausting any non-exempt assets.
Just make sure any debts he includes aren't jointly owned. If they are, you may still be responsible for the debt if only he files for bankruptcy (i.e. as an individual rather than as a couple).
Your Own Debts
If you have your own debts, it doesn't make sense to pay off your husband's debts first. Instead, you can work out a plan together to tackle all debts, focusing on those with the highest interest rates or balances first. Depending on how much debt each partner has, consider alternating between your debts and your husband’s, or paying an equal dollar amount towards each.
Am I Responsible for My Spouse's Debt
Most spouses' bigger question is, am I responsible for my spouse's debt? In some cases you may be liable, but there are other situations when you aren't responsible for it.
During Marriage
During your marriage, the only debts you're responsible for are those your name is on. For example, if your husband has a credit card in his name only, you aren't responsible; however, you should know that creditors can access the assets you own jointly, even if your name isn't on the card. This would make you somewhat liable because they could use your assets to cover the debt.
Of course, if you cosign a debt for your husband during marriage, you are equally responsible for the debt.
Death
In death, you aren't responsible for your husband's debt; instead the money typically comes out of his estate. The creditors can only hold you individually responsible for the debt if you jointly own the debt with your spouse. That said, if you were going to inherit some or all of his estate, then it does affect you if the estate has to pay out to settle a debt.
Divorce
Typically in divorce, judges divide the shared debt equally. Therefore, if your name isn't on the debt, and your state isn't a community property state, you likely won't be liable for the debt. However, if the court orders you to pay a debt, you must pay it, even if the creditor doesn't expect the funds from you; otherwise, if you don’t pay it as ordered, you could be in contempt of a court order.
FAQs
When Can a Debt Collector Contact You About a Spouse's Debt?
The only time a debt collector may contact you about your spouse's debt is if you are also liable for the debt, which would typically be because you are on the debt too.
Does a Spouse's Bankruptcy Affect Me?
Your spouse's bankruptcy doesn't directly affect you as long as the accounts he includes don't have your name on them. If you own any joint accounts that your spouse included in the bankruptcy, you will still be liable for the debts if you don't also file bankruptcy. Your spouse's liability will be written off, but yours will remain.
The bankruptcy’s impact on your spouse’s credit score can of course impact you, as well, if you want to obtain credit (i.e. a mortgage or car loan) together.
Is a Person With Power of Attorney Responsible for Debt?
No, a power of attorney isn't responsible for their charge's debt. The only way you might be responsible is if there were any dishonest or negligible acts on your part that could be proven in court.
Wife Pays Husband's Debt - The Bottom Line
Should a wife pay a husband's debt? It really depends. Sometimes it's to your benefit to take care of the debt and move on; but, if it's a repeating pattern you find yourselves in, you may want to consider counseling to get your finances and marriage back on track.
Want to level up your game around money in your relationship? My free quiz will help you learn your Couple’s Money Personality Type AND how you can grow from there!
Adam Kol is The Couples Financial Coach. He helps couples go from financial overwhelm or fighting to clarity, teamwork, and peace of mind.
Adam is a Certified Financial Therapist-I™, Certified Mediator, and Tax Attorney with a Duke Law degree and a Master's in Tax Law from NYU. He is a husband, dad, and musician, as well.
Adam's wisdom has been shared with The Wall Street Journal, the Baltimore Ravens, CNBC, NewsNation, and more.
