Getting married means not only combining lives, but also combining finances and financial consequences. There are many things to consider when a potential partner has a significant amount of debt and the other does not. This can affect credit scores and the ultimate ability to get a home mortgage after the marriage. While the marital financial situation can be greatly improved by paying off your fianc's debt, you should weigh your decision before forking over the cash.
Discuss Debt and Repayment
Sit down with your fianc and ask for full disclosure of all debts and repayment terms. Find out how your fianc plans to repay the debt and over how long a term. Do these plans fit in with plans for the marriage?
Remember to ask: Are there any defaults on debts? Late payments? If your fianc has defaulted on a debt, once you're married, your wages could potentially be garnished in order to pay the expenses.
Consider the monthly payments on each debt versus how much income your partner is pulling in. This can affect your future partner's credit score and eventually your ability as a married couple to get a mortgage on a home.
Create a Budget
Lay out a marital budget that includes both of your incomes and debt payments. Also include such things as rent or mortgage payments, property taxes, car payments, utility bills and grocery expenses.
Visiting a credit counselor is an excellent idea at this stage, especially if neither partner has ever created a budget before. A certified credit counselor can help create a debt repayment plan and help you create a marital budget that will help you line up your debt repayment goals and prepare for the future.
If you don't already know your credit scores, ask the credit counselor to help you find out.
Consult an Attorney
It is a safe assumption that any money you pay toward eliminating your fianc's debt will not be able to be recovered, especially if it is paid off before legal marriage.
If you have more money than your fianc and wouldn't miss the money, you could consider just paying off the debt, but be aware that you may not be able to recover from your spouse once you've been legally married.
Discuss with an attorney the divorce laws of your state and property division. If necessary, a prenuptial agreement may be advisable in order to protect assets.
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