Can a Prenup Protect You From Your Spouse’s Debt?

 Posted on January 16,2023 in Family Law

Most people who hear about prenuptial agreements think that these legal contracts are used by engaged couples who have high assets in order to protect those assets should the marriage not work out and they divorce. And while that is true, what is also true is that prenuptial agreements can also be used to protect one spouse from the other spouse’s debt should they divorce.

How Much Debt Are We Carrying?

Years ago, most people did not “live on credit.” Other than the mortgage on their home and vehicle loans, cash was king. If you wanted to purchase a large ticket item for your home, take a vacation, etc., you saved your money and then paid for the item in cash.

In the late 1960s and 1970s, retail stores began offering customers store credit cards, where the customer could charge their purchases and pay the balance off over time. Although there were some bank-issued credit cards during this time, MasterCard, Visa, and other major cards did not really gain popularity until the 1980s. Today, the average American owes approximately $5,200 in credit card debt.

There is also the issue of crippling student loan debt—with the average amount owed at about $40,000 per person. Medical debt has also become an issue. According to national statistics, more than 11 million people in the U.S. owe more than $2,000 in medical bills and more than 3 million owe more than $10,000.

Divorce and Debt

Looking at these figures, it is not surprising that many engaged couples are bringing some kind of debt into their marriage before they even say, “I do.” Typically, the spouses will agree that they will be responsible for their own bills and/or should they divorce, they will take their debt with them.

As many divorced people can attest, that agreeable and loving attitude of collaboration can quickly turn acrimonious and contentious during a divorce. Unfortunately, there are some debts that although created by one spouse could leave the other spouse just as responsible.

The best way to avoid these situations is to create a prenuptial agreement before the marriage that clearly stipulates which debts are each spouse’s responsibility.

Contact a St. Charles Family Lawyer

Couples from all financial backgrounds can benefit from speaking with a Kane County prenuptial attorney and finding out what legal options and protections a prenuptial agreement can provide. Call Weiler & Associates, Inc. at 630-331-9110 to schedule a confidential consultation and find out how we can help.

Sources:

https://www.fool.com/the-ascent/research/credit-card-debt-statistics/

https://www.newyorker.com/news/us-journal/prenups-arent-just-for-rich-people-anymore