What happens to my debt after getting married?

Marriage can affect your finances beyond wedding expenses, but tying the knot doesn't mean you automatically share responsibility for your spouse's past debt.

You may decide to help each other out to pay off outstanding loans and credit cards, but in most cases, credit applied for by an individual is that individual's responsibility alone.

However, there are some exceptions when a husband or wife may find themselves legally responsible for paying off debt taken out by the other party, before or during the marriage.

When might I be responsible?

You might have sole or shared responsibility for your partner's debt if:

  • You have a joint account – if you open a bank account or apply for a loan or credit card together, you'll both be responsible for the debt, even if you don't use the account or you're not a cardholder. If you sign the agreement alone, you will have sole responsibility.
  • You act as guarantor – if you sign a guarantor agreement, loan repayments or credit card debt will become your responsibility if your spouse fails to keep up with their payments.
  • You open an account for someone else – any account under your name is legally your responsibility alone, even if you opened it for the use of your partner or other family member.
  • You refinance your spouse's debt – you can choose to take responsibility for old debt by transferring it to a new loan or credit card in your name. However, this can put you at risk if debt continues to increase and it could damage your credit rating.

What if a marriage breaks down?

No one enjoys planning for the worst, but making a prenuptial agreement before your marriage allows you and your partner to amicably decide how your mortgage or other debts should be divided.

Without a prenup, the court has the power under the Family Law Act 1975 to assess any properties and debts in a marriage and decide how these should be divided. New debts incurred after separation but before divorce may be treated differently.

What if a spouse dies?

Debt agreements don't change in the event of death. If the deceased was solely responsible for their debt, this obligation won't fall to their spouse unless it was a joint account or they're a guarantor. However, any shared assets the deceased owned may need to be sold to pay off their debt, even if these are jointly owned.

Where can I get help?

If you and your partner are planning to apply for a loan or credit card together, you should make sure you know who is liable for the debt. You should also check the details of your existing accounts if you're not sure.

If your partner is struggling to pay off their debts and you want to help, you can choose to re-finance a loan with a new agreement under your own name or both of your names, or transfer their credit card debt to a new card you have responsibility for. This decision needs to be taken carefully and you should make sure you're aware of the possible risks it involves.

If you want to know more about your legal responsibilities when getting married, or you have more questions about how this could affect your finances, you should talk to a financial adviser. Call Debt Fix on 1300 332 834 to speak to one of our experts today.