Dear Debt Adviser,
I just read your response about credit rating in marriage. But I would like to take this one step further. My fiancée has a good credit rating and I have a very poor rating. She feels that I would adversely affect her rating if we got married so she has decided that she never wants to get married, only to date the rest of our lives. She's 54; I'm 58.
My question is, since I have absolutely no desire to own anything of hers -- property, money, business or debt either now or in the future, I am wondering if even in a community-property state, would she become responsible for my past debt if I should pass away? She has no need for me to be a part of any purchases that she makes, and I also can financially take care of anything that I may need.
Can we write a prenuptial agreement to protect her 100 percent?
I know that you don't get it. For years I didn't either, but your situation is not one that can be solved by analytical reasoning. This is an "affair of the heart." And that's a good thing too, because from strictly an analytical perspective, a guy that can't handle his finances ranks right up there with a cute puppy that's not house trained!
Seriously though, as was the case for the previous couple, anything you bring into a marriage -- property, money, debt, etc. -- is yours and remains yours whether you live in a community-property state or not. However, once you get married, things change for you in a community-property state.
For example, if your fiancée became your wife and she bought property, even in her name only, you are entitled to half the property should you split up. Likewise, any debt incurred by either of you after you are married technically becomes half of the other person's responsibility.
Any prenuptial agreement is only between the two of you. It does not concern or bind any of your creditors. Further, if you were married, a tricky part with community-property states is that whatever income the two of you accrue while married would be considered community property and fair game for collectors if they need to collect on your debts in the future -- even the debts that were yours before the marriage.
Even though this sainted woman is willing to overlook your untidy financial past so she can be with you, I suggest that you take some actions to clean up your act whether marriage is in the immediate future or not. And who knows, if you become a paragon of financial virtue, wedding bells may still chime … someday.
To begin, I recommend that you close your pre-existing accounts before your marriage takes place so that she can prove the accounts were yours and yours alone, and that all debt was incurred before the marriage. This will appear thoughtful on your part should the unthinkable happen and you pass away or some future collector tries to ignore the legal fine points and goes after her for your debts, in which case you may wish you were dead.
I don't know if a single event, such as medical bills from an accident or illness, caused your bad credit or not. However, if your low score is the result of questionable decisions or bad luck, I suggest that you have a chat with a financial counselor. Not the investment type, I mean the credit counselor type.
Again, this is a thoughtful action that will signal your intention to do better in the future than in the past. It will also give you insights into what happened and why, and how you can avoid such problems in the future. You can find free advice from a member of the National Foundation for Credit Counseling at (800) 388-2227 or www.nfcc.org, or the Association of Consumer Credit Counseling Agencies at (866) 703-8787 or www.aiccca.org.