“That’s a lot of money to argue about,” said Alan Plevy, a family law attorney in Vienna, Virginia. “That prenup has cut down on the potential battles that would fuel the gossip industry for years.”
While most people don’t have the finances that warrant a pre-nuptial agreement, there are steps to take before getting married that can help to prevent a disastrous divorce.
First, experts say, try to gain a full financial picture of the bride or groom before courtship turns to marriage.
“This will help avoid financial surprises down the road,” said Rod Griffin, director of consumer education with Experian, a credit reporting agency.
Some 56% of Americans carry $15,000 or more in credit card debt with only 4% claiming they are debt-free, according to a National Foundation for Credit Counseling (NFCC) poll.
Both parties need their credit score to be on track in order to accomplish any shared financial goals, such as buying a home.
“A score below 579 is considered poor and having a poor score can often make it difficult to be approved for credit,” Griffin said.
Financial advisors can prevent a financial disaster for their clients during courtship by calling for a confidential meeting in their office where both parties can safely be honest.
“It may be tempting to keep student loan debt or eye popping credit card debt a secret,” said Ann-Margaret Carrozza, attorney and author of “Love & Money.” “Remember though, that it will eventually come to light and debt plus a sense of betrayal over the secret can be lethal to the health of the relationship.”
To make the most of the time with an advisor, couples involved in the romance are advised to bring along a current credit report from Transunion, Equifax or Experian.
“It’s essential to find out about your partner’s level of debt and credit score,” Carrozza told Newsmax Finance. “These numbers will directly affect your mortgage or car loan interest rates. Perhaps more important than the numbers, though, is whether the conditions leading up to the debt have been dealt with.”
For example, whether the debt is a result of overspending or merely a result of helping a relative pay medical bills can reveal details about a potential underlying problem.
“A poor credit score may not be a relationship deal breaker but it can be a sign of someone who needs to better manage their finances,” said Griffin. “Improving starts with educating yourself about what factors impact your score, and then working to improve your financial habits accordingly.”
Red flags on a credit report that should concern a potential spouse include accounts in collections and delinquent accounts because they can lower a credit score.
“Before you get married place copies of all statements of accounts, retirement plans and documents into a safe deposit box to preserve them for your claim of pre-marital property,” Plevy told Newsmax Finance.
