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What Happens to Credit Card Debt When You Get Married?
When you get married, you do not automatically become responsible for debts your spouse incurred prior to marriage. Your pre-existing credit card debt and your spouse’s pre-existing credit card debt will largely remain each individual’s sole responsibility to repay or settle.
The exception to this is if you cosign or become a joint holder on your spouse’s account before marriage. In this case, you could be held responsible, regardless of who made the purchases or when.
After getting married, you may become responsible for any credit card debts you incur as a couple, either under a separate account or a joint account. This is especially true if you live in one of the nine community property states:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
In most other states (known as common law states), the laws are more nuanced. It’s important to research your state’s laws and how they might apply to you.
Before marriage, consider reviewing your partner’s credit report and discussing existing debts. It’s also wise to create a joint budget and discuss how each bill will be paid and by whom, in order to prevent headaches over missed payments.
If you or your spouse has unpaid credit card debt, you’ll want to be careful about becoming joint account holders. You may also consider debt consolidation, as a married couple can consolidate debt over time.
Credit counseling services that include a debt management plan can help ensure your financial future as a couple is not complicated by unpaid debt.
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Is Consolidating Credit Card Debt a Good Idea for Long-Term Financial Health?
Consolidating credit card debt can be a beneficial strategy for improving long-term financial health because it often translates to lower interest rates than you need to pay credit card companies.
Debt consolidation usually involves taking out a new loan to pay off multiple high-interest credit cards. This allows you to combine payments into a single account with one interest rate.
This can be beneficial for several reasons:
- A lower interest rate means you pay less money over time.
- It’s often easier to budget with a consolidation loan because you have a fixed repayment plan that involves a single monthly payment instead of several credit card payments with differing due dates.
- A simplified and streamlined payment system makes it easier to ensure you do not forget about a payment. It can also help you stay organized and maintain a clearer picture of your overall finances.
- A history of on-time payments and a lower debt-to-income ratio can help improve your credit score over time.
- Consistent, on-time payments can show lenders that you are managing your debt responsibly, which may help you qualify for better interest rates in the future.
Is it worth consolidating credit card debt? Yes, but credit card consolidation has some drawbacks, which are important to note. Some consolidation or debt relief programs may charge origination or service fees—be sure to verify terms before enrolling. Missed payments also continue to have detrimental effects.
But perhaps most importantly, credit card debt consolidation does not address the underlying habits or deeper financial issues that led to debt accumulation in the first place. Improving long-term financial health requires developing a realistic budget, reducing unnecessary spending, and creating an emergency fund for unexpected expenses.
Financial counseling may also go a long way toward changing spending patterns and instilling habits that result in responsible money management.
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Who Is Responsible for Credit Card Debt in Divorce?
How do you split credit card debt in a divorce? The answer depends on where you live. Courts in the 41 equitable division or common law states consider factors like income, earning capacity, and which spouse benefited from the debt when deciding how to divide it.
In these states, each spouse is typically responsible for the credit card debt that they incur under their name; for joint accounts, a judge may divide the responsibility based on income and each person’s repayment capacity.
This is why it’s important for a divorcing couple to close any shared credit card accounts as soon as possible, to prevent one spouse from running up a high bill during separation or transferring their debts to the joint account. The other spouse could end up sharing the responsibility.
There are 10 community property states and territories where things work a little differently:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Puerto Rico
- Texas
- Washington
- Wisconsin
You’ll want to consult with your lawyer on your state’s specific laws, as states like Alaska also have a community property opt-in option for residents.
Community property laws generally treat debts incurred during marriage as jointly owed, often resulting in a roughly 50–50 split, though judges can adjust this depending on circumstances.
Regardless of your marital status, if you’re struggling with debt, you may want to consider debt management with a nonprofit. Use our debt management calculator to discover options for debt consolidation.
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Can You Get a Home Loan with Credit Card Debt?
Generally speaking, yes, you can get a home loan with credit card debt.
A reported 46% of Americans have unpaid balances on their credit cards, but as with any loan application process, whether you can get a mortgage with credit card debt depends on the specifics of your current financial situation and your history of debt management.
If your credit card debt is high or your credit history shows a track record of missed payments, your credit score may fall below the threshold. If this is the case, the mortgage lender could deny you a loan.
One way to tell if your credit card debt will be an issue is to check your credit score. To qualify for a private mortgage loan, you’ll often need a credit score of 670 or higher. To qualify for an FHA loan, your credit score may need only to be “fair” (a 580 or higher).
Of course, the exact figure required will depend on the lender, but if your current score is below a 580, you may want to work on paying down your credit card balance before applying for a home loan.
Other factors that are taken into consideration during the home loan application process are your income-to-debt ratio and your number of outstanding loans, such as car loans. Banks and lenders also want to see that you have a stable income and that you possess the funds needed to make a down payment.
If you are concerned you may not qualify for a home loan due to your credit card debt, take the following steps:
- Review your credit report for any errors or outdated information that might be lowering your score. Correcting inaccuracies can sometimes help fast-track your eligibility.
- Start consistently making payments on time. Demonstrating responsible credit use can help offset the negative impact of carrying a balance.
- Work on building an emergency fund so you’ll no longer need to rely on credit cards to pay for unexpected expenses.
Whether you can buy a house with credit card debt is a common question but unfortunately, the answer gets complicated quickly depending on your circumstances. A debt counseling nonprofit can help you navigate the specifics so that you can feel confident in your spending choices.
Debt Reduction Services offers a credit-building education program that can help you meet your housing goals. Reach out to learn more.
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