We've spoken briefly about bankruptcy and marriage; but how do you reduce your chances of experiencing the type of financial mistakes that could send your newly formed family to the bankruptcy court?
Below are four tips on preventing post-marital financial blues:
- Consider maintaining a separate savings account for personal spending and a joint bank account for the expenses of the household. But don't co-mingle your finances if your spouse has a history of bounced checks and overdrafts. Mismanagement of your bank account could become your first step towards bankruptcy if you're not careful.
- Decide before you get married if you want to put the house in both of your names. Oftentimes newly married couples decide that their mortgage will only be in the name of one spouse if one of them has financial troubles. But if you depend on both incomes to make the payment, make sure it is clear that both of you are responsible for the mortgage payments before you buy the house. Becoming delinquent by even just a few months on your mortgage can lead to foreclosure and eventually bankruptcy.
- If you have debts before getting married, make sure that you decide how these debts will be repaid before you tie the knot. While a spouse's pre-marital debts won't become your debt after marriage, a creditor might go after bank accounts and other assets you hold jointly. Even if your spouse later decides to file bankruptcy, your income will be considered to determine which type of bankruptcy they can file.
- If possible try to resolve any outstanding financial issues such as judgments and lawsuits before you get married. You may even want to consider filing bankruptcy before you tie the knot to discharge debts and prevent creditor asset seizures so that you can start your marriage with a clean financial slate.