One’s marriage is an exciting occasion, filled with newness, joy, love, and weird family members who start the conga line at the reception and refuse to stop until they’re the only one left. Good times for all, no? For some, though, the financial repercussions of marriage can be unclear and worrying, and like the Montagues and Capulets, poor credit can sometimes cross the stars of even the purest lovers. For example, if your fiancé recently filed for bankruptcy, you’d probably feel a little worried, to say the least, about your future finances. Hopefully I can increase your understanding of the situation.
It can be worrying if your future spouse files for bankruptcy, especially if you don’t understand how marriage and credit affect each other. The good news is that married couples’ credit reports are not merged. You can keep your individual good credit; your partner’s debts are still their own responsibility. Hopefully, most of them were cleared up during bankruptcy, anyway.
Here’s the bad news. If you’re applying for something with a joint credit application, your partner’s credit may make an impact. Sometimes, the lender may not want your partner involved in the loan at all. If he is willing to accept a joint filing, he may offer a higher interest rate.
When cosigning for a payment, you must remember that, while no one wants to entertain the notion of divorce, you will be partially responsible for that debt regardless of what happens in the marriage. In fact, in the event of a default, you’ll be the first person sought out, as you had the best credit in the agreement.
If you do choose to cosign on a payment, for example, a car, I would advise a loan not in excess of $5,000 to $7,500. This will enable your partner to slowly build credit without too much risk to your personal credit score. Another way to do this is to cosign on a secured credit card or a low-balance card. These should enable him or her to create a positive credit profile within two years of bankruptcy. This means they’ll no longer have to piggyback off of your credit, and the sooner that happens, the better.
The main thing to remember is to be cautious with the access you let your partner have to your good credit. There are ways of building their credit that don’t require the ruin of your own.
If you have additional questions regarding how bankruptcy on your own behalf or on the behalf of your future spouse could affect you, please get in touch with the southern California bankruptcy attorneys at Westgate Law.