Money talks and marriage walks: dealing with marital debt as a couple

Tying the knot (or untying it) usually means rethinking how you manage money. Your budget and savings goals might change. And you may have questions about how to handle marital debt. 

Whether your marriage is ending or just beginning, having a solid grasp on how to handle separate debts and marital debts could pave the way to a better financial future. So let's break down what marital debt means, the laws surrounding it, and practical ways to approach paying it down responsibly. 

What is marital debt? 

Marital debt is debt that was created during the marriage. Any debts you or your spouse brought into the marriage, on the other hand, are separate debts. 

Courts often refer to marital debt when discussing how debts should be divided during a divorce. How debts are divided can depend on whether you live in a community property state or a state that follows equitable distribution rules. Let’s dig into what that means. 

Marital debt in community property states

Community property states consider the assets—and debts—of married couples as equally shared. 

That means if you get divorced in a community property state, you share 50/50 legal responsibility for any marital debts. It doesn't matter which spouse took out the debt; it's all about timing. 

If the debt happened after the date you married, then the law generally views it as belonging to both of you. There are nine community property states:

• Arizona

• California

• Idaho

• Louisiana

• Nevada

• New Mexico

• Texas

• Washington

• Wisconsin

States that aren't community property states follow equitable distribution rules for divorce. They're also called separate property states. 

Separate property states recognize that couples can have shared marital property, including marital debt, as well as  separate property or debt. During a divorce, equitable distribution means the court tries to come up with a split of debt and assets that's fair to both parties. 

Common types of marital debt

There are different types of debt you can have in a marriage. Some of the most common types of marital debt include:

• Mortgage loans, including home equity loans or home equity lines of credit (HELOCs)

• Credit cards

• Medical debt

• Business loans

• Car loans

• Personal loans

Again, the broad definition of marital debt is based on the timing and when the debt was created. It doesn't necessarily consider whose name is on the debt or what it was for. 

Those things can, however, come into play in conversations about divorce and debt when navigating state laws. 

For example, say you're married and live in California. You bought a home with your spouse after the marriage, but now you've decided to split. 

In the court's view, you have equal ownership of the home and equal responsibility for the mortgage since it's a community property state. 

When you're talking about marriage and debt, student loan debt is often a hot topic. But are student loans marital debt? 

Here's the simple answer: 

• Student loans you took out before the marriage are separate debts. 

• Loans you or your spouse took out after the marriage may be considered marital debts. 

How those debts are divided in divorce can depend on the laws in your state. 

Tips for managing marital debt within your relationship

Marital debt can lead to misunderstandings or even arguments if you're not united with your spouse in how to manage it. 

• Communicate. Talking about money can be the simplest way to head off financial arguments. Consider scheduling a regular money date once a week or once a month to go over your finances. 

• Create a joint budget and plan. While you're talking about debts, don't forget to map out your budget. There are different ways to budget as a couple but what's important is that you're on the same page about how to shape your financial plan. 

• Set goals together. Talking over your goals matters, as you may have some that overlap and others that don't. Going over your individual and shared goals could help you prioritize which ones to pursue first. 

• Save for emergencies. An emergency fund or rainy day fund makes it easier to cover expenses without incurring new debts. If you're just getting started, you might set a small goal of saving $500 to $1,000 first, then working your way up to three to six months' worth of expenses. 

• Consolidate and prioritize. If you have shared or individual debts, you'll need a plan for paying them down. You might consider consolidating shared debts to streamline monthly payments or save on interest if you're able to get a lower rate. It's also helpful to rank your debts in order of which ones you'd like to pay off first as you shape your plan of attack. 

• Consider getting help. If you're trying to tackle debt as a couple but aren't making progress, talking to a credit counselor could help. A credit counselor can go over your budget and debt to help you create a realistic plan for managing your money. They can also walk you through the pros and cons of solutions like debt management or debt resolution. 

You might be wondering how to protect yourself from your partner's debt in marriage. Again, what you have to keep in mind is how the law in your state treats marital debt.

Signing a prenuptial agreement could offer some protection if you both agree in writing on how debts will be treated should the marriage end. Avoiding joint debts could also help insulate you to a degree, though again, laws vary. 

If you're truly concerned about potential negative impacts, you may want to talk to an attorney (before you're married, if possible) about how to stop marital debt from complicating your finances. 

And if you're coming out of a relationship with debt, a debt expert could help you decide what to do next. 

Navigating marital debt during divorce

If you and your spouse have decided to part ways, there are two main options for managing marital debt. You could:

• Work out an agreement between the two of you to determine which debts each one of you is responsible for, or

• Let the court handle it

If you're in a community property state, then the division of marital assets or debts is most likely going to be an even split. If you're in an equitable distribution state, the division may be different. 

Having a good divorce attorney could make all of this easier to navigate. You'll want to find someone who's well-versed in marital debt divorce rules in the state where you're filing your petition. 

Your attorney could help you negotiate with your spouse on who should be responsible for marital debts. They could also draw up a divorce debt agreement template for you to sign if you're able to reach a compromise. 

Remember, getting divorced doesn't mean your debt just goes away. Keeping a level head could help you figure out what to do about marital debt so that you're able to land on solid ground once the divorce is finalized. 

What's next

• Plan a budget date to sit down with your spouse, and go over your expenses and financial goals. 

• Add up your debts, including what you owe individually and jointly, then discuss how you want to prioritize debt repayment or how to get rid of debt. 

• Consider talking to a debt expert about how to manage marital debt if you're having trouble paying off what you owe.