Many people who are in long-term relationships are putting off marriage because at least one of the parties has significant debt. This is especially true in today’s economy, where school loans and few job offers have led to overwhelming debt for a large number of young people.
Which begs the question: If you decide to get married, how will your debt affect your spouse (or vice versa)? What if one of you files for bankruptcy?
When you marry, your credit score will not be merged with your spouse’s credit score. However, credit companies will consider both of your scores if you apply for credit together. Therefore, you may want to consider applying for credit in the name of the person with the better credit score.
Of course, there are some drawbacks to this approach and it is important to take all factors into consideration before you apply for credit.
Filing for bankruptcy
It is perfectly fine for one person to file for bankruptcy before marriage. Even after marriage, one spouse can file for bankruptcy on his or her own.
As long as you don’t own property and debts together, the question to ask is not “Will this affect my spouse’s credit?,” but “Is bankruptcy the right option for me?”
While bankruptcy will remain on your credit score for a few years (seven or ten, depending on the bankruptcy), it may be better for you to file bankruptcy than to continue to pile up debt. You know that your credit score is already struggling. Bankruptcy can help you get to the point where you can begin to rebuild your credit.
How does that work? First, you can only file for Chapter 7 bankruptcy once in a number of years. Because of this fact, creditors are sometimes more willing to lend to someone who has filed bankruptcy than to someone who has a history of debts – it is less risky for them. Second, the bankruptcy does not stay on your credit report forever. Once you do not have to worry about your debts anymore (because they were discharged through bankruptcy), you can focus your energy on rebuilding your credit.
Source: Fox Business, “Will bankruptcy scare off future spouse?” Sally Herigstad, Aug. 2, 2012.
Learn more about how bankruptcy will affect your credit by visiting our pages on Los Angeles bankruptcy.