138 – Marriage and Finances: Till Debt Do Us Part?

Wayne Kay 00:04
Marriages, finances – till debt do us part. That is our topic today on the Debt Matters podcast, where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada.

I’m Wayne Kay, and we’re going to dive into this issue of getting married and will that affect your credit rating or your ability to get credit? Are you responsible for your spouse’s debt if they cannot pay? How does marrying somebody with bad debt really affect you? And we’re going to talk about the strain that happens to marriages as well because of debt and maybe some options to get rid of that strain and bring you closer together.

My guest today, Bonnie Hooley with LCTaylor Licensed Insolvency Trustee from Winnipeg, Manitoba. Hi there, Bonnie.

Bonnie Hooley 00:50
Hi, Wayne. Thanks for having me. It’s nice to be back.

Wayne Kay 00:52
Oh, this is a great discussion, marriage and finances, till debt do us part. I’m just smiling because I actually saw some recent stats about couples and money. There’s a very high percentage of couples that have no idea how much money their significant other makes. Also, they have no idea what’s in their savings. RRSPs, TFSAs. But I guess that probably doesn’t surprise you.

Bonnie Hooley 01:24
It doesn’t, because I have met so many of the people that you have. Definitely the couples that know everything. Usually one of them is more on top of the finances than the other, and the other one’s trusting them.

But you also have other couples that keep everything so separate that they have no idea what their partner earns and their bank accounts are separate. I mean, that’s different than generations ago.

But that’s sometimes the new norm. There’s stuff to be said for that because they’re not relying on one another’s finances for their daily living or their future. So if their partner is struggling financially or successful financially, they won’t really be directly affected. But it’s strange to me because I’ve always been the type of person where, well, what’s his is mine and what’s mine is mine.

Wayne Kay 02:16
So we do it just fine, and he agrees. That’s how we are at our house, too. And it seems to work really well. And I remember way back when, before, I think, we got engaged and my wife said, you better be out of any kind of debt before we get married.

Bonnie Hooley 02:34
That was a wise woman. Very wise woman.

Wayne Kay 02:37
She laid down the law right there. And so, goodbye, motorcycle.

Bonnie Hooley 02:43
We do have people that ask us, if I marry this guy, is his debt going to affect me and is it going to affect my credit rating? And so there is sometimes that misunderstanding. Just because you take on someone’s name or you marry them doesn’t mean that you take on their credit rating. The credit rating companies still register us separately.

So if you entered the marriage with bad credit, it wouldn’t affect your spouse directly. Her credit rating can still be impeccable, but the two of you coming together and her working for your future and you still paying off your past, that’s going to affect the marriage. So indirectly, your credit rating would have had an effect on the marriage, for sure.

Wayne Kay 03:28
Right. But it can affect, if you both are going to apply for credit for something, you’re going to buy something together, and one has terrible credit – that can take a hit.

Bonnie Hooley 03:37
Yes, because that’s the other thing. You can’t rely on the person with bad credit to assist you in getting a loan as a couple.

And also, if you do get a loan as a couple, the other person’s bad credit could jeopardize your loan because creditors could come after the joint assets for the other person’s debt. So although it’s not a direct effect, it definitely indirectly affects you. And so you definitely should be cleaning that up so that the whole relationship is a lot healthier.

Wayne Kay 04:07
You are in a way responsible for your spouse’s debt, or not? If it happened before you met or you got engaged or married?

Bonnie Hooley 04:19
Technically you’re never responsible for your spouse’s debt unless you co sign. So if you got married and you both had your own visa and no joint visa, if you don’t pay your visa, they can’t come after your wife.

Now, if you have a joint bank account and you don’t pay your visa, they can go into the joint bank account. It can jeopardize joint assets, but your debt is your debt. Her debt is her debt.

So again, if you ran into financial trouble and you had to file a proposal under the act or a Bankruptcy or something, it doesn’t mean your spouse goes down with you. It just means that you’re going to be erasing your name from the debt.

If you have joint debt and one of you says, I have got to get out of this mess, they’re garnishing my wages, or we just can’t afford this, and the other person is, no, I’m not doing it. If you filed an assignment in Bankruptcy or a proposal and your partner didn’t and you were joint on some debts, your name would be erased from those debts. Any debts that you’re personally on, your name would be erased from.

So the other person still has the same responsibility for the debts as they always did. But because you would be in a Bankruptcy or a proposal, you just can’t help with those debts. So it’s an indirect effect.

It’s sort of a gray because your debts, your debts, your assets, your assets, but anytime you share things, share assets, co-sign debts, share debts, then the other person is directly affected. Otherwise, they’re only indirectly affected.

Wayne Kay 05:54
Okay, what kind of stress would this put on a marriage?

Bonnie Hooley 05:59
Now that’s the biggest one, I think, because anytime there’s financial difficulty and if one person has it or they both have it, it affects every part of your relationship. Because our debt affects what we do, what we dream about, where we can go. It can affect your physical health, it can affect your mental health.

So when you think of that kind of an attack coming on a relationship or a marriage, it absolutely can erode it and destroy it. So anytime there’s financial stress, I strongly recommend talking to a professional, because you don’t want to jeopardize your marriage because of financial stress.

And relationship breakup is sort of a two edged sword because I see it as being often one of the major causes of a Bankruptcy or a proposal or financial failure. But I also see that the financial failure or Bankruptcy or proposal will often cause a relationship breakup. So it’s sort of which comes first, the chicken or the egg?

It’s part of the relationship because of all the things that it affects. And so you need to seek financial counselors or financial advice from a Licensed Insolvency Trustee anytime there’s financial stress in a relationship.

Wayne Kay 07:24
You could see how the power dynamic would really change. It would tilt in a very negative way and be very difficult on that relationship, as you’re mentioning.

Bonnie Hooley 07:37
Yes, it’s like a dark cloud. And so you have to come out from under it because it affects everything. I know if you just even think about the first time you couldn’t pay a bill, how much that one bill ate away at you until you got it paid. And so you think of it coming from you from all angles and things pressuring and adding up and it goes on for days and weeks. It’s just not good for your physical health, not good for your family, it’s not good for your children’s future. It just affects everything. It’s a big strain on relationships.

I sort of threw in here, tongue in cheek, can Bankruptcy save my marriage? And I threw that in there as a question to discuss, because indirectly it kind of could. Because if you are having stress in your relationship, because of finances, dealing with it, whether it’s through a Bankruptcy or a proposal, or you talk to the professional soon enough that they can find another way out, it can save your relationship.

I physically see a difference in people between when they come and talk to me about their financial trouble and then a month or so later when they’re coming in for counselling. And at first I used to think it was a coincidence, but it’s almost like a physical burden is lifted and people don’t need to carry that. Because you got into the mess, that’s fine for whatever reason you got into the mess, but finding your way out of the mess is what we’re trained to do and to help people with.

Wayne Kay 09:10
I just feel like people are going, oh, so there’s hope. You give us hope in this podcast and so happy that you shared this information. Can we discuss how you do this before you get married?

Bonnie Hooley 09:28
That’s a good question. And I know that in the olden days, if you were getting married with a minister or something, they’d have these questions you would discuss before you got married because they can be things that would cause a fight.

I remember one of the questions we had to discuss was, if my mother took ill, would we allow our mother in law to come live with us? Those kinds of questions. So I think if you’re planning on getting together in a relationship, because finances affect every part of that relationship, talking about it and talking about how are we going to do our finances as a couple.

Are we keeping things separate? Are we joining? What are we joining? What aren’t we joining? What kind of financial goals are we going to set? Like do we want a house? Do we want cars that are paid off? Do we want to travel a lot? What sort of goals are we going to work at? Are we working at them alone? Are we working on them together?

And also discussing what is our plan if we run into financial trouble? Because people like to talk about the nice flowery things when you’re getting into a relationship, but if you have a plan that says if we ever hit a financial bumpy road, this is what we’re going to do. Then it’s not so hard when you hit the bumpy road to say, okay, we did talk about this, so let’s do what we plan to do and seek help before it’s too late.

Wayne Kay 10:51
So I’m talking about my kids now. My daughter and her husband, they’ve been savers since they were in grade eleven, and we’ve known him since he was in kindergarten with her. So they’ve been together a while now. And so they were really on the same financial plan. They had the same ideas.

Then my son and his significant other, they kind of had different ways of dealing with money. So they’ve had to learn together.

And once again, there was that discussion, and we made sure that the two of them, we talked to them and said, you both have to be on the same page here when it comes to those finances and exactly what you’re talking about. So it’s awkward, though. It’s awkward for everybody.

Bonnie Hooley 11:45
That’s a good thing you’ve tapped into. And it’s sort of like personalities. Sometimes your second example is more common than your first because opposites often attract.

There are sort of personalities that go with your spending habits. Some are savers, some are spenders, and some people like to buy gifts for others because it increases their self worth. Now, the way I worded it sounded wrong, but sometimes people like to have things in their budget that other people think are silly.

I like to give gifts at Christmas and at birthdays just because I think it’s a nice thing to do. It’s a tradition that was in my family, and it’s a tradition I like to keep. I do it within reason. I’m not buying for everybody I meet, but the other partner might think, well, that’s ridiculous. That’s money we could be spending on truck repairs or something like that.

So if you have those discussions and you say, this is important for me to have this in our budget, and this is important for me to have this in the budget. If there’s areas you absolutely disagree on spending, then just have a portion of your budget that says, okay, this is my piece that I can spend as I feel is my discretion. And this is a piece you can spend as you feel is your discretion, because I think the way you spend, it’s ridiculous. You think the way I spend is ridiculous, but as long as it’s compartmentalized and it’s maximized to this much a month is going to those things.

Then you don’t run into financial trouble when you can still live with those financial differences between the couple. But trying to have the conversation, I think if we made it a more normal part of life, then it wouldn’t be so awkward. But yes, just to bring it up, at what point in your relationship do you start bringing it up?

Wayne Kay 13:38
Because the relationship seems to, the way they move now is way different than the way they moved when I started my relationship with my wife. It’s very different. But now I’m very proud of them because they’re like this spreadsheet people, and they’ve got little spreadsheets everywhere. And I’m like, okay, well, if that works, that’s great. But they’ve got plans and you have to discuss that.

It doesn’t matter where you’re at in your relationship. I think you need to be doing the homework. This is a perfect time. When we get into the new year, it’s to look at your finances and look at what you can change, what you can tweak, right?

Bonnie Hooley 14:15
Yes. Maybe that needs to start being the new year’s resolution. Talk about your finances with significant others. Because even talk at every stage in life, talking about planning for retirement, planning for what’s going to happen if you pass and if you’re in a relationship. All those financial things have to be talked about all the way through the relationship, because there’s so many things that change, not just when you come together or for your future, but there’s always a future to plan for.

Wayne Kay 14:47
And then you get grandkids and great grandkids. It just becomes a whole different game, for sure. This has been a wonderful discussion. Anything else you wanted to touch on regarding marriage, finances and the whole debt thing?

Bonnie Hooley 15:03
I don’t think so. I think we’ve covered it. And I’m just going to add that if your kids both do spreadsheets, I don’t think that’s normal for the new generation. I think that’s good parenting.

Wayne Kay 15:15
Well, thank you very much.

Bonnie Hooley 15:19
Well, they’re going to be so happy later that you encourage that because they have no idea the leg up that’s going to give them in the future.

Wayne Kay 15:26
Absolutely. Right on. Well, thank you so much. I appreciate chatting with you.

Bonnie Hooley 15:30
All right, take care, Wayne.

Wayne Kay 15:32
My guest today, Bonnie Hooley. You can learn more or schedule a free consultation with LCTaylor Licensed Insolvency Trustee, through the website lctaylor.com.

That’s it for today’s Debt Matters podcast. Make sure you subscribe wherever you get your favorite podcast from. And of course, for more information, you can always check out debtmatters.ca. Thanks for listening.