Article Summary
Cathy from Dallas, Texas, discovered that her husband of 27 years rack up close to $1 million in debt behind her back. She is worried that she might be liable for half of it after filing for divorce. Money can be a significant driver of marital strife, and financial infidelity can lead to divorce. Coleman and Warshaw, co-hosts of The Ramsey Show, gave some advice to Cathy on how to handle the situation.
What This Means for You
- Being open and transparent about finances in a marriage can help avoid debt-related conflicts and betrayals.
- If you find yourself in a similar situation, assess all your debts and assets accurately, and explore programs like the IRS’s innocent spouse relief program to avoid liability for your spouse’s debt.
- Regularly review and update your financial plans and budgets, and consider contributing to an emergency fund to avoid getting into debt.
- Being equal partners in financial decisions can help avoid conflicts and potential financial infidelity in a marriage.
Original Post
When you enter into a marriage, you expect your spouse to be faithful. But sometimes, a different type of infidelity — financial — can rear its ugly head. That’s what happened to Cathy from Dallas, Texas, who recently called into The Ramsey Show seeking urgent financial advice.
Cathy revealed to co-hosts Ken Coleman and Jade Warshaw that she suspects her to-be ex-husband has racked up close to $1 million in debt behind her back — and she’s worried that she’s on the hook for half of it. Money can be a huge driver of marital strife — especially when one spouse keeps secrets. A late 2021 survey by the National Endowment for Financial Education found that 43% of people with combined finances in a relationship have committed an act of financial infidelity. Cathy, meanwhile, blames her situation on the fact that she allowed her husband to handle the family finances for many years while she became a stay-at-home mom to their four children.
For one thing, he hadn’t paid income taxes in three years, which amounts to about a $160,000 debt. Since their taxes are filed jointly, Cathy assumes she’ll be liable for half that sum. The husband also owes $80,000 in credit card debt on cards Cathy didn’t know exist (and there may be more). Plus, there’s a $550,000 mortgage on Cathy’s husband’s office building that she signed. On top of everything else, in 2019, Cathy’s husband borrowed $500,000 from Cathy after she received an inheritance, which she is counting towards the debt. He claimed he was spending the money on his business.
Cathy doesn’t have a record of how that money was spent, and Coleman and Warshaw told her to assume that’s money she won’t ever get back. “I feel like an idiot,” Cathy said while describing the situation. Warshaw and Coleman said they believe Cathy is going to be responsible for 50% of certain debts her name is on. However, it’s unclear as to how much she’ll actually owe or whether there is additional outstanding debt, as her ex isn’t forthcoming with the information.
Thankfully, Cathy and her spouse own a paid-off home worth about $2 million. So, there are some assets that can be used to pay off the debt. But Warshaw had to gently admonish Cathy for letting the situation get to this point. “It can’t just be, ‘he handles that, I handle this,'” Warshaw said. “You also have to own your part in it.”
Key Terms
- Financial Infidelity
- IRS’s innocent spouse relief program
- Debt
- Marital Strife
- Financial Literacy
- Budgeting
- Emergency Fund
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