What should I know about marrying a guy with debt, poor credit and tax liabilities?

July 28, 2007 9:42 AM

I'm going to marry a guy who has a lot of debt and possible trouble with the IRS. What should I know?

He has the "usual" debt - car, credit cards, school loans - but a lot of it. His credit rating is trashed and won't get any better before the marriage. Though I also have some debt, my credit rating is pristine. Am I correct in thinking that his debt coming into the marriage remains his responsibility? Or can those creditors come after me (I have nothing to take right now anyway)? Am I right in thinking that the simple act of marrying this guy does not affect my credit rating, but joint accounts/loans would?

The other issue is that he owned his own business before we met and did not file tax returns for several years (due to laziness/disorganization, not criminal intent or political reasons). It's unclear how much he owes because he hasn't been willing to organize the paperwork and see an attorney. I don't foresee this getting resolved before we marry (although I could make it a condition of marriage). Will I be liable for his tax delinquency?

We live in Illinois but will probably get married in Wisconsin. I know you're not my lawyer and this isn't legal advice.

posted by anonymous to law & government (23 comments total)

You should absolutely make this a condition of marriage. The number one stressor on marriage is money. He has to get his financial life in order before you become part of it, or trust me, you are in for a world of pain.

My issue--and I'm hardly financially perfect by any stretch of the imagination--is that this isn't one mistake. This is a longstanding pattern of debt creation and unwillingness to bother with fixing it. No matter how much I loved someone, I would be very leery of marrying them when there are this many issues hanging over their head.
posted by dirtynumbangelboy at 9:50 AM on July 28, 2007 [5 favorites]

I second the angelboy and multiply it by infinity. This is a disaster waiting to happen.

He needs to prove he can get his act together before you get married because I PROMISE you that if you marry beforehand nothing will change except your credit will be ruined as well.
posted by konolia at 9:59 AM on July 28, 2007

If you're set on marrying this guy (which I agree with the others may not be a good idea right now), you should see a lawyer and sign a prenup that will shield you from his debt. If he's not willing to do this, take it as the only sign you need that you shouldn't marry him.
posted by mkultra at 10:29 AM on July 28, 2007

I have read and heard that one of the main causes of divorce is financial problems. Perhaps, in addition to taking steps to shield yourself from his debts, you should make a condition of marriage that he take some fundamental steps toward financial responsibility (such as: contacting a tax lawyer, trying to settle some of his debts, taking a class, or even declaring bankruptcy).

(Although I'm not really one to speak; my wife laments what she calls my "bury my head in the sand" approach to finances.)
posted by jayder at 10:54 AM on July 28, 2007

What mkultra said. The pre-marriage cloud of joy and optimism will not last indefinitely; credit problems will. Please do yourself a favor and make sure his problems do not become yours.
posted by languagehat at 10:57 AM on July 28, 2007

Woo, ditto all that! Once your credit is in the crapper it's tough to pull it out and can easily take years. I think a pre-nup would be a must. And you would have to be the one strictly to control all the finances. One more thing that crosses my mind, can you imagine not ever really owning much? Because if he stays true to his habits, he will spend every dollar you make. If he's not serious about changing, that's a very possible future for you two together. Protect yourself and your credit. It's really a precious thing. Good luck.
posted by CwgrlUp at 11:00 AM on July 28, 2007

I am not a lawyer or married.

But your fiance seems really irresponsible. This is seen through money, but money may not be the only problem. I think that at the very least a prenup is required, but I would hold off on the wedding.
posted by PinkButterfly at 11:02 AM on July 28, 2007

I echo what PinkButterfly just wrote: you need a pre-nup, and frankly, you want to hold off on the wedding until he takes some actual, verifiable, concrete changes. Filing those tax returns and meeting with credit counselors would a bare minimum here.
posted by Asparagirl at 11:21 AM on July 28, 2007

From this site: If you live in a community property state -- Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin....both spouses are responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other... Legally, you may be liable for debts you don't know exist, and those debts also can hurt your credit score.

In your question, you said you currently reside in Illinois, which isn't listed as one of the community property states, but this is definitely something to be aware of in case you do move to one of those states.

Responsibility for your spouse's debt can also fall on you if you get divorced.

I would definitely recommend that you see a lawyer before you enter into this marriage.
posted by hurdy gurdy girl at 11:38 AM on July 28, 2007

A pre-nuptial agreement might not protect you from all of his debts. If he owes back taxes, you might still be liable for those. Student loans are also in a special category that can't be discharged through bankruptcy, so they might stick to a spouse more than other debts.

There's also the fact that he'll probably continue to incur debt after you're married.

Have you considered living together without getting married for a while?
posted by alms at 11:46 AM on July 28, 2007

One small consolation: even if he winds up owing back taxes from his days as a business owner, you may still be able to get "your share" of a tax refund from the IRS each year. You want to look into filing an injured spouse allocation. It may be worth getting an accountant or tax preparer to go over it with you.

Still, he needs to get his back tax situation worked out. Yeah, I'd make it a condition of getting married that he see an accountant and file returns for those years. It'll be a simple way of showing you that he's willing to face the problem, and it will reduce the amount of trouble that you two can potentially get in. (The penalties for not filing are much harsher than the penalties for filing but not paying.)
posted by nebulawindphone at 12:10 PM on July 28, 2007

Just to reiterate what hurdy gurdy girl said, one of my mother's friends is currently fighting for her house, as her ex-husband's creditors are trying to take it after he filed bankruptcy. The conditions of their divorce clearly state that she is not responsible for his debt, but it doesn't matter to the creditors. She might not be legally liable, but she has to be able to afford an attorney to fight it.
posted by ukdanae at 12:20 PM on July 28, 2007

follow-up by the OP

I am not asking whether or not I should marry the guy. He has not incurred any additional debt since we've been together, and we've been living together for 2 years. My question is whether his past debt and IRS problems (not his assumed future behavior) will affect my credit score and whether I will be liable for them.

I'm not trying to violate Askme rule #3 as written by jessamyn. I'm really not irritable, I swear. I'm just trying to get some concrete advice about my situation, given the fact that the marriage is definitely going to happen.
posted by jessamyn at 12:29 PM on July 28, 2007

15 years ago I was in love with someone with lousy credit. I believed his explanations for his credit woes and his promises to clean up his act. I married him.

I then spent many years with chronic insomnia, due in large part I believe, to me worrying about our finances. I watched my credit score sink. I learned I could not trust him financially when I discovered he had taken things that I had bought before meeting him and sold them to use the money for his harebrained schemes "business projects".

And then I left him. And he slunk off to another country, leaving me to deal with all the the debts that were now held jointly. That was eight years ago. I'm back to where I started, with no debt, and great credit, and a painfully learned life lesson.

This may sound harsh, but I have come to believe that if someone is not financially responsible they do not make life partner material.

A few years ago, one of my girlfriends brought her boyfriend home to meet the parents. Her father pulled her aside and said "Look, fuck him all you want, but don't marry him." When I heard that story, it was already too late for me, but I found myself wishing someone had said those words to me all those years ago.
posted by ambrosia at 12:29 PM on July 28, 2007

The credit score question, more or less from the horse's mouth.
posted by nanojath at 12:43 PM on July 28, 2007

This may sound harsh, but I have come to believe that if someone is not financially responsible they do not make life partner material.

A friend of mine is learning this lesson, too. Her soon-to-be-ex-husband, who had always had terrible debts, didn't pay his taxes on his side business, etc., declared bankruptcy the month before he left her for another woman (after 10+ years together and having a child). Even though they'd kept their finances as separate as humanly possible throughout the marriage, she still had some creditors and the IRS come after her, and her credit score took a bit of a hit. (As a bonus, during their divorce settlement, HE had the gall to go after HER 401k plan to get half of her retirement funds!) Also, because of his bankruptcy and low income for several years preceding it, she's limited in what she can get for child support from him -- even though HE'S now making six figures (with no debt, because he discharged it all the month before he left for the other woman!), and she's struggling to make good on her own debts (student loan, etc.) while raising their kid.

Just another anecdote to suggest, Anon, that one spouse's financial irresponsibility can have massive repercussions years down the line, no matter how good everyone's intentions at the beginning and how diligent you are at trying to keep finances separate. The fact that your fiance has not taken on any additional debt is certainly a large point in his favor, but the simultaneous fact that he's not willing to meaningfully address (even if "just" out of laziness) the tax stuff is just as large a point against him.

I personally think you should make his getting the tax stuff in order a necessary precondition to getting married. I also think you need a prenup, even if he does that. Finally, you might want to take a look at a book like this one. I haven't read it myself, but I've seen it recommended a few times.
posted by scody at 12:47 PM on July 28, 2007

What do you need to know? Both of you need to live frugally, work hard, budget carefully every month, and enjoy the simple things in life. You don't need cable television, a plasma tv or a cruise to the Bahamas every winter.

You're in love, right? Enjoy it. It's better than what most people got.
posted by JaySunSee at 1:34 PM on July 28, 2007 [1 favorite]

o not get joint accounts, credit cards, or put your name on something with his that has a dollar sign on it.

Don't buy property together. Even if there is only one name on the paperwork. Because if he starts falling behind on payments either you are going to have to foot the bill, or you will both lose it. As others have noted, collection agencies may not be picky about "his" and "hers" property.

And yes, Anon, you didn't ask. But I would say this to my sister, so I'll say it to you: Please make getting his financial house in order a condition of your marriage. Get thee to a tax attorney ASAP. (Trust me, unfiled taxes don't go away, penalties just grow, and grow and grow. Personal Experience.) Go with him. Know that he will have your support in this (and know that he can't hide from these problems.)

Think of it this way: If he really loves you and respects you, he will do what he can to create a safe and reliable environment for both of you in the new marriage. If he can't get this under control... Well what does that say?
posted by Ookseer at 1:54 PM on July 28, 2007

My husband had not-great credit and IRS debt prior to our marriage. We've been married for four years with no problems. We're paying off the debt, he's rebuilding his credit, and everything is fine. His poor credit and IRS problems have not affected my stellar credit a whit. We do not have any joint credit accounts except the mortgage. We do not have a prenup.

If you'd like to talk more with someone who understands and doesn't think your fiance is an evil horrible man, email me.

BTW I do handle most of the finances, although we maintain separate checking accounts and he pays his IRS debt through a combination of his account, and tax refunds. I don't mind helping pay off the debt because we are partners, but it was important to me that he write those checks himself and be responsible for monitoring the payoff balance etc.

Anyway step one is seeing a good accountant to deal with the IRS matter (and anything else outstanding). He'll get on a payment plan an everything will be fine.

Have a wonderful wedding and enjoy yourself.
posted by miss tea at 2:18 PM on July 28, 2007 [3 favorites]

someone who understands and doesn't think your fiance is an evil horrible man

Not one person here has said Anon's fiance is an evil, horrible man; indeed, what many of us are pointing out is that it does not require an evil, horrible man to create very real repercussions for a spouse. On the contrary: good people with good intentions can still make bad choices that create bad situations for themselves and their partners. The advice to require Anon's fiance to start getting his financial house in order -- as yours has evidently been willing to do, miss tea -- and for Anon to make sure she is adequately protected at the same time stems from precisely that understanding.

As for this: He'll get on a payment plan [with the IRS] an everything will be fine.

Possibly. But also possibly not. You have no way of knowing or guaranteeing that, and Anon's fiance has so far been unwilling to take the steps to get to that point. I'm not calling him evil or horrible; I'm simply pointing out the fact that he is not actively creating a solution to a very real problem with potentially serious consequences.
posted by scody at 4:28 PM on July 28, 2007 [2 favorites]

i have experience from the other side: after 10 years of marriage and a major custody battle, my credit was shot, i was in debt pretty badly and i had irs problems due to not filing and unreported income. in the midst of all this, i met the future ms lester #2.

as painful as it was, i was upfront with her about my financial issues. winning the custody battle, but not getting any child support made things a bit worse. one of my creditors moved to garnish my wages, which finally made me choose the bankruptcy option. once i got that out of the way, i was able to more aggressively handle my irs issues. by the time our wedding day came up, i had cleared most of my issues.

the point that i wish to make is that i was willing to do these steps on my own before marriage. i wasn't happy about my financial situation, but realized that i was going to have to take a few lumps to resolve it ... so i did. ms lester #2 makes a lot more money then i do, and i didn't want to go into the marriage having her pay off my bad debts. your future husband should have these same traits. if he's willing to divulge his true financial situation, and take the steps of correcting them, then there shouldn't be a problem. if he isn't, and treats it by saying 'things will work out', then there is a problem.

creditors can be pretty ruthless. once they begin to see you're married to him, they'll start going after you. it might not be legal, but they will try anyway. be prepared to fend them off. any joint property you own will be subject to liens, and they will quickly start harassing the both of you if they smell any kind of payout possibility. keep the joint accounts to a minimum and learn how to write a good cease and desist letter.

make his organizing his irs issues a prerequisite for marriage. if he does so, you (may) have a keeper.
posted by lester's sock puppet at 6:15 AM on July 30, 2007

just to add: you should also get a complete history of his debts, and devise a plan for payback, too.
posted by lester's sock puppet at 6:38 AM on July 30, 2007

I am grateful every day that I didn't marry my financial fuckup ex-fiance. Or put him on my accounts. He would have sucked me dry, no question.

Honestly, do you have to legally marry the guy now?

An ex of mine (not Financial Fuckup Ex), long before I dated him, "married" his girlfriend in a non-legal ceremony, but didn't ever get legally married to her because she had a ton of debts. In the end, they split up, but he was able to keep his assets without her financial damage. Maybe this might work for you?

Because Twue Wuv or not, this is going to be a major romance-killler when you are fighting over what he did to your finances after the marriage. It will all become your problem, even if you divorce him later.
posted by jenfullmoon at 9:16 PM on July 30, 2007