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Valentine Memo: How to Avoid Financial STD

I don't mean to interrupt your chocolate-and-roses-filled Valentine's Day. But in marriage, what's your biggest financial risk? That your spouse has a secret vice and it's not about other partners? I'm talking STD in a different form — "sexually transmitted debt." Your beloved might be hauling the burden of excess credit card spending or unpaid student loans that have grown from a molehill into a mountain.

A survey by CESI Debt Solutions, which coined the STD phrase, found that 80 percent of spouses spend money that their partners don't know about. A little bit here and there isn't a problem. (The people surveyed thought that spending less than $100 didn't need mutual discussion). But $100 a week? That's financial infidelity. The sooner you find out, the better your chance of keeping the marriage intact.

Before you married, your mate might not have confessed to the size of a debt or didn't tell you enough for you to assess the financial challenges you'd face. After marriage, your spouse's spending might grow in secret, until you get the first call from a collection agency.

In relationships, money is the last taboo. Engaged couples typically talk about their dreams for the future, children, jobs and earnings (or a general indication of earnings) but not the nitty-gritty of net worth and debt. It seems crass and untrusting to demand a detailed accounting from someone you love.

But the financially promiscuous rarely change their habits when they enter a relationship — at least, not at first. You have to corral them, which means finding out about the risk before hidden spending drowns you both. After marriage, you could find yourself on the hook for your spouse's spending habits. At the very least, you'll want to know how to protect yourself from ruin.

You'll be affected by your spouse's debts, even if you're not legally responsible for them. Paying them off will crimp your mutual living style. It could prevent you from getting a mortgage, because your partner's credit score is shot. Too much financial pressure will wreck what you're trying to build.

So before you get married, settle in for a little Financial Disclosure 101. Bring copies of your own bank statements, tax returns, credit history, credit score, credit card statements, retirement accounts and other investment accounts, and ask your intended to do the same. If you're already married and discover an explosion of spending, round up all the financial statements to get a clear picture of where you stand.

If your spouse turns out to be a secret spender, how much of the debt are you equally responsible for? Here's the rundown:

You're normally responsible only for loans that you cosign. Typically, this will be a mortgage or rental agreement, an auto loan or lease, or a joint credit card. If the marriage comes apart and your spouse bunks on the payments, you'll be responsible for the whole amount. That includes any debts on the joint credit card, even if you opposed the spending or didn't know about it.

You're not responsible for any debts that your spouse brings into the marriage. However, you can be affected by them. If old debts force your spouse into bankruptcy and you bought property or hold bank accounts together, his or her half could be forfeited, leaving you in trouble, too.

If your spouse takes small-business loans after your marriage, you might have to cosign, like it or not. Lenders typically want the business owner's personal guarantee of repayment and will want the spouse on board, even if you don't work in there. For example, it might be necessary to put up a jointly owned home as collateral.

A large and unpaid student loan will drag on your marriage until death. You cannot get rid of a student loan in bankruptcy. If it's in default, interest and penalties build at a rapid rate. The loan can be sold and resold to debt collectors, who will pepper you with phone calls. Your credit history will be a permanent mess. Child-care payments eventually end but unpaid student loans — and collection efforts — will chase you even in retirement. If unpaid, it's the worst debt to have.

Do you put off the wedding if your intended fails Financial Disclosure 101? Maybe, if the debt is large and you see no way that it's likely to be repaid. If your partner comes clean, however, you can put together a mutual repayment plan. Meanwhile, keep your own credit card in your name and don't sign for any joint debts. (In some cases, even separate cards might not save you. You could be liable if your spouse runs up bills for "family expenses" from which you both benefit.)

If you're married, you'll have to pull the spender back from the brink. Maybe he or she will agree to use only a debit card or a low-fee prepaid card while letting you work on your debt repayment plan. Feb. 14, the official Day of Love, would be a bad moment to bring it up. But tax time looms. Might as well face the music before then.

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