As a New Jersey couple who might be about to get married, a positive conversation to have is how to deal with debts. More and more, spouses are coming into the marriage with debt already accrued, such as student loans and credit cards. And while that debt might be considered individual debt where only the party that accrued it is liable, consolidating the loans for better payment options or taking on new debt after the marriage happens can affect who is liable for what. Signing a prenuptial agreement or a post-nuptial one if the marriage already took place is a good option to establish how debt will be managed in case of a divorce.
The benefits of pre- and post-nuptial agreements
Though it might be difficult to discuss and come to an agreement about finances even before you get married, it can be beneficial in many ways. Some of the benefits of signing a prenup or a postnup include:
- Preventing additional conflicts if the marriage does end
- Establishing separate and marital assets
- Protecting business interests
- Defining who is liable for debt accrued before marriage
Student loan payments might be affected once you are married
While in most cases, student loans taken in the name of one spouse before the marriage will be the responsibility of that person after marriage, if the spouses file jointly, the payment amounts of the loans, particularly if using an income-based repayment plan, will be affected. The liability of student loans taken after marriage might also be affected if the other spouse co-signs for the loan or if the money is used for joint living expenses.
Creating a detailed prenup or postnup can help couples not only protect themselves by defining liability but can also help them plan financially for their marriage. And because the process requires open, honest conversations about hard topics, it can also help how they communicate.