Money Matters
chase16
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Spouse Debt Questions
Hello! I am a newbie to this website. I've spent a good portion of time lurking theknot (Im currently engaged), and got curious about this site. And then I saw money matter, and WOW do you ladies know what you're talking about. I actually have some questions I hope you can help me with. Both my fiance and I are in the Army, stationed at Ft Sill as Drill Sergeants (blah). We are planning to get married in Feb (tiny, tiny wedding. really more of an elopement). Here's the thing: I have great credit (high 700s) and almost no debt (just 7000 I owe on my car). I was raised by very tight fisted parents who passed on their penny pinching ways to me. However, my fiance was not so lucky, and not only is he not so good with money, his ex basically trashed his finances. (I'm talking reposessed car, multiple bills in collections, credit card debt, etc. All told, I think he probably owes around 50,000.) The divorce is not final yet (its dragged on for almost a year now), so while I'm hoping his ex will get her share of the debt, it may not happen. I guess my question is this- will his bad credit affect mine once were married? How bad will it be? What is the best way to fix his finances? (His paycheck comes to my account and I pay all of the bills, and he is content with me handing him cash every couple of weeks). Thanks for the advice!
(also- In case you were curious, I'm sure some of you were, she left him before he and I met.)
(also- In case you were curious, I'm sure some of you were, she left him before he and I met.)
Re: Spouse Debt Questions
Your credit and his credit are separate. Where it will affect you is if you try to go get a car loan or a house loan together. If you try to put both names on the loan, you may find that they won't approve the loan at all or you'll get an awful interest rate. So for things like that, it'll probably be better to be on the loan by yourself.
Another thing you can do now is look for things you can cut back on if you'll need help to make the payments (hopefully plus extra to speed the process). You could always post a budget here if you need help with that; I learn a lot from those types of posts!
Even though you've taken over the money, I'd keep him in the conversation, have him help you budget, etc. I think it's important he learn from his mistakes so if you ever can't run the finances for awhile (maybe if you're deployed) he'll be able to keep things running. I control our money too, but have gotten H in board with the overall plan. I wouldn't add him to your CCs unless you know he's "changed" his spending habits and money knowledge.
My H has seriously rehabbed his credit from 500s to 700s the last few years, so there is definitely hope! The biggest things to help him were time and consistently paying his credit cards (and other bills) on time. When we finally paid them off he jumped thirty points! Unfortunately there's no quick way to do it, but it does get better. It is possible that when you guys but a house it will have to be in your name only (and only your income will qualify for the mortgage calculations).
Good luck and welcome!
I am in the same situation as you when I got married, his ex helped distroy his credit. It hasn't hurt mine except when we did try to apply for a few things together, we ended up getting better rates when we changed a few things to my name only. I take care of the bills too. I ordered his credit report, went through things and contacted companies to verify balances owed and started setting up payment plans with a few of the companies so that the collection calls would stop. It's taking time, but his credit is getting better. With paying things off, we have been able to increase his credit score by 100 points in a little over a year. I don't expect to get everything resolved fast, but if all keeps going well by time we hit our five year anniversary, we will have all the debts paid off and have some nice money in the bank.
HE needs to be involved in your joint finances - all aspects (setting goals, establishing a budget - tracking spending and paying bills- and not just hand them over to you
I recommend he reads Total Money Makeover by Dave Ramsey - for getting out of debt
and for both of you to read and share - Smart Couples Finish Rich by David Bach -- great for understanding each other's relationship with money, values, goals and establishing a financial plan that works for you BOTH.
Take your time. He is barely out of his marriage. Give it another year. Get on the same page financially and get proof that he can be a good financial partner in life.
I just wanted to add some personal experience, this varies from state to state, though MOST states, spouses do not inherit each other's credit, some do. When we lived in Wisconsin, my student loan debt and credit card appeared on DH's credit report and affected his credit score, but his did not show up on mine. We actually received a letter shortly after we married telling us this would be happening. Turns out Wisconsin is one of like, 5-10 states that are "Marital Property States" in which credit/debt is combined.
Absolutely this! It is called wage garnishment. Here's what happens...
Your FH owes the companies. The companies want to be paid (and they deserve to be paid). They go to the court system and get legal ability to garnishment your FH's wages as soon as the funds enter his bank account. As it is court-ordered, the bank MUST legally allow this to happen to the bank account. If you are joint on a bank account with your FH, the wage garnishment applies to whatever funds are in the account, even if they came from your direct deposited paychecks. Until you are more certain of the state of your FH's finances and financial condition with this divorce, I would remain on separate bank accounts. Do not put any of your money into accounts with his name at the bank. Also, isn't it illegal to be married to two people? I mean, doesn't a divorce have to be legally finalized before one person can marry someone else? I echo PPs...wait until your FH is totally separated with no strings to this woman before you enter into a marriage with him.
If they (the companies owed) can take out of a joint account to collect (beyond wages as you mentioned) on the debts and OP's wages have been deposited into that account, than yes, INDIRECTLY they can garnish her wages. Also, pretty much everybody has direct deposit, so while they garnish the FH's wages, which would be hitting that account via direct deposit, they would be affecting her account if she had used FH's paycheck to pay bills but the pay got pulled out via the garnishment and she then overdrew her account. If that happened, and she had resulting overdraft fees she would be responsible for those fees.