Love and Marriage: Starting Out In Debt

Posted in In The News
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

It’s February, the time when many couples are thinking about making that ultimate commitment. Before you say “I do”, should you be talking about how much debt your potential partner might have?

Today we released a Harris/Decima Research study that shows that four in ten Canadian couples say they are bringing debt into their marriage. According to the survey, the new family was likely to start off with an average of $21,503 in debt on their wedding day.

Marriages begin in debt: Hoyes Michalos

That’s a scary statistic. You are starting a new life together, full of hopes and dreams. You want to start a new family, buy a house, and live the Canadian dream. Will that be possible with over $21,000 in debt? To buy a house you need a down payment, and you can’t start saving until you get out of debt. Your dream of the good life will take many years to achieve if you are starting off in debt.

Bringing up the subject of money when you are starting a relationship can be a challenge, but it’s necessary. In our survey more than one in three (36%) people said they did discuss their personal debts prior to getting married.

This lack of communication before you begin your new life together often carries forward into the relationship. Based on the results of our survey, those who did not discuss their debts before their wedding were significantly more likely to fail to communicate about family spending after the wedding bells stopped ringing. This lack of managing money as a team has risks. Couples who started out hiding their debt issues were least likely to have paid off their original debt, and in fact only added to it.

Almost one in five (18%) of all Canadians who file bankruptcy or a consumer proposal blame a relationship breakdown as a major contributor to their financial problems, and 28% of all filers are separated or divorced at the time of filing.

This raises an important question: what came first, the financial problems or the marriage problems?

Should you be worried about being responsible for debts brought into a marriage by your partner? Unless you have guaranteed those debts, in writing, you cannot legally be held responsible for those obligations. However, working together to solve your family debts is a wiser choice. That doesn’t mean you have to pay the other person’s debt but it does mean building a combined household budget and talking through the decisions.

You don’t want the pressure of financial problems to lead to a relationship breakdown. The key is open, honest communication and a commitment by both partners to work together to pay off debt so you can build a less financially stressful life together.

If you are starting out your marriage in debt it’s not the end of the world. Here are my top tips for dealing with pre-marital debt:

1. Discuss a repayment plan ahead of time.
2. Prepare a family budget.
3. Postpone major purchases (and perhaps a family) until after the debts are dealt with.
4. Consider carefully before co-signing on your spouse’s pre-marital debts.
5. Don’t open a joint bank account at the same bank where one spouse owes any debt.
6. Discuss any decision to take on new debt together.
7. Consider a pre-nuptial agreement to protect any assets in the event of a marital breakdown.

By working together you can conquer your debt and have a long and happy relationship.

For more about our study, download our whitepaper: Love, Marriage & Debt by Hoyes Michalos

For further information please contact:

Douglas Hoyes, CA, Trustee in Bankruptcy, Hoyes, Michalos & Associates Inc.
Email Doug
Twitter @doughoyes
Google Plus: https://plus.google.com/+JDouglasHoyes
Phone: 1-866-747-0660 or 310-PLAN

Ted Michalos, CA, Trustee in Bankruptcy, Hoyes, Michalos & Associates Inc.
E-mail Ted
Phone: 1-866-747-0660 or 310-PLAN

Love, Marriage & Debt Survey | Hoyes, Michalos & Associates

About J. Douglas Hoyes

Doug is our co-founder and is a Licensed Insolvency Trustee, Consumer Proposal Administrator, certified Insolvency Counsellor and Chartered Professional Accountant.

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