In Your Debt: How Couples Can Cooperate in Paying Off Debt

Between helping his parents financially and losing income as a result of the COVID-19 pandemic, Jeremy Mazza has fallen into serious credit card debt. Relief came from an unexpected source: his partner, Gina Lambert, who was given a small inheritance. She suggested “investing” part of her reward in their joint future by lending Mazza small sums that he could apply to pay off his debts.

It took a bit of convincing.

“To ask for money when I was a breadwinner and I had parents who asked for money themselves, I didn’t want to follow in their footsteps and take them,” says Mazza. “But that’s not what this was, that was a caring thing.”

Maza and Lambert handled the situation with open communication and specific loan terms. And for them, it’s paying off: Mazza estimates its credit score to rise by about 150 points. The couple, who live in Richmond, Virginia, are getting married this year, and hope to buy a home soon, too.

“I took a very, very high interest in making sure my partner’s credit score and finances were in as good shape as possible,” says Lambert.

While joint debts are a shared liability, the individual debts you enter into a relationship are ultimately yours to deal with. However, they can get in the way of making plans for life as a couple, so it might make sense for your significant other to help you with your debt in some way. But don’t go into an arrangement of this kind without a plan.

Get double with the full financial picture

It is essential that you be open with each other about your individual financial situations, especially as your relationship becomes more serious.

“If a couple is planning to get married, it’s a good idea to have a conversation before they tie the knot,” says Trina Patel, senior director of financial advisory at Albert, a financial services firm, based in Los Angeles.

Schedule some distraction-free financial dates where you talk about what’s going on with each of you. These conversations can help you set common goals and figure out what actions to take to achieve them, such as adjusting your budget or finding ways to increase income.

“Debt can often bring guilt, shame, and embarrassment that leads couples not to talk about the debt they have,” Leanne Rahn, a financial advisor with Fiduciary Financial Advisors in Grand Rapids, Michigan, said via email. “Vulnerability is hard but remember, you and your significant other are a team.”

Consider non-monetary ways to help

You may not be able or unwilling to pay your partner’s debts. However, there are many other ways you can provide support. You can act as an accountability buddy, help rethink your family budget if you live together or find ways to be more frugal in your joint spending.

Perhaps you could do some extra chores around the house to give your partner time to pick up extra hours at work, or you could help your partner adjust their resume if they want to find a higher-paying job.

Discuss financial arrangements

If you are comfortable gifting or lending your partner money to pay off their debts, disclose all the details. Select the dollar amounts and write them all down.

Lambert started, for example, by offering a six-month, interest-free $2,000 loan to Mazza. Over time, they both became comfortable with additional, larger loans.

Working with an attorney under contract can help both partners feel at ease.

“A legally binding agreement would certainly make the responsibilities of every other spouse and spouse clear and straightforward with the law holding them accountable,” Rahn says.

Know when to say “no”

It’s okay not to want to shoulder someone else’s financial burden, even if you care about them. If your relationship is relatively new or you’re not sure how it will progress, you can still encourage your partner while paying off their debts.

And if your partner doesn’t take “no” as an answer, consider it a Red flag money Proceed with caution.

“I wouldn’t have brought this up if we were still in the honeymoon phase,” says Lambert. “At that point, we had already moved in together. He had already proven, time and time again, that he was reliable.”

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This column was provided to the Associated Press by the personal finance site NerdWallet. Sarah Ratner is a writer for NerdWallet. Email: srathner@nerdwallet.com. Twitter: @SaraKRathner.

Related link:

NerdWallet: Money red flags can make or break a couple https://bit.ly/nerdwallet-money-red-flags-can-make-or-break-a-couple