If your marriage is experiencing stress and problems due to money arguments, then you are not alone. Many potential clients we speak to during the first conversation often blame finances for the stress they are experiencing in their marriage. Often, that financial stress is related to debt (whether secured or unsecured). Potential divorce clients often speak of how their debt has resulted in a loss in many areas of the marital relationship including date nights. The focus on marital debt results in a loss of other areas being possible within the relationship and a feeling that personal life goals can no longer be reached.
Many people have strong negative feelings about debt. These feelings can result in a belief that having a consistently in debt spouse is a major reason to consider divorce. According to psychologist and National Debt Relief Financial Wellness Board Member, Dr. Regine Muradian, “Debt can cause conflict and friction in a relationship, but it’s all about communication and how each partner views their debt.”
Here are 5 reasons why debt can cause a divorce:
1. Debt causes disagreements on how each spouse spends money
Do you and your spouse disagree on how to spend your disposable income? Do you want to travel or spend money on recreational activities while your spouse wants to aggressively pay down credit card debt or pay extra money toward the mortgage balance? These are very different perspectives on debt which can cause spouses to argue over the household budget and spending. Each spouse expressing how the money being earned isn’t being used in the way he or she would like. This disagreement can become worse over time if the credit card debt is increasing each month by 18% and one spouse believes that you will never be able to completely pay off the balance. That spouse may also strongly believe that until the debt is paid off, there is no ability to take a vacation or invest in retirement or a college savings plan.
2. To avoid the disagreement, one spouse does not tell the other about debt
When reviewing the debt section of a Statement of Property with a client, we often hear that a spouse deliberately chose not to tell the truth about debt. This can occur from hidden purchases, secret credit cards, and lying about income being earned. Some spouses believe that it was the strain of current debt that resulted in the need to hide additional debt to avoid further arguments and stress on the marriage. This isn’t an uncommon problem. The stress can make simple purchases – like Starbucks each morning – become hidden purchases to avoid the discussion of whether that $100 plus each month could be better spent.
How do you feel about debt? Would you be embarrassed if your friends, family, or coworkers knew how much debt you are carrying? Would your debt have them view you as one who overspends or is fiscally irresponsible? Did you incur this debt to keep up with the lifestyle you want to present but cannot afford? Do you feel lonely as a result since you cannot discuss your debt with friends, family, or coworkers? Do you feel isolated because you don’t have extra money to spend on a night out or an activity with friends or coworkers? Over time, these feelings can lead to stress with your spouse.
How do you feel about your spouse’s debt? If you have no debt but your spouse continues to incur significant debt, are you resentful?mDo you feel as if this resentment is due to your inability to do things in life that you want to do? For those who are the main income earner in the household, does paying down your spouse’s debt make you feel as if you are sacrificing personal wants to keep the family out of debt? Spouses may begin to consider divorce when having a two-income household isn’t making it easier to obtain financial security and they are unhappy in other areas of the marriage.
5. Inability to communicate regarding debt
The prior 4 points have set forth reasons which are magnified when there is an inability to communicate with your spouse regarding debt. Do you and your spouse communicate honestly and often about how much money you have to spend each month? Do these conversations stay positive, or do they become critical of the other spouse? Are the two of you able to reach agreements on monthly spending and how to pay off marital debts? Have you considered jointly creating a monthly budget that specifically addresses the contributions of each spouse toward the debt being paid off? Has there been any discussion about what is available to assist in paying down the marital debt? Have you explored a 401k loan or cashing out a whole life insurance policy or consolidating credit card debt on to a 0% interest credit card?
Credit card debt, unsecured debts, 401k loans, and all other marital debts, will be equitably divided by the court as part of the overall division of marital property and debts in a divorce. If you or your spouse has exclusively used a credit card or obtain an unsecured loan or taken out a 401k loan for purposes that did not benefit the family, such as excessive purchasing of clothing or jewelry, individual vacations, gambling, etc., you should let your attorney know as soon as possible but no later than when you turn in the first draft of your Statement of Property. Such expenditures may be treated as squandering marital income or assets and, if presented properly to the court during the divorce case, can become the sole responsibility of the spouse that incurred the debt. In most cases, the court will not audit credit card use throughout the history of your marriage, but there are exceptions.
Should you need the advice of an experienced divorce attorney or have questions or concerns about your situation, know that we are here to help and ready to discuss those issues with you.