Photo (cc) by xJason.Rogersx
Stacy Johnson answers readers’ questions every Friday. Have a question? Ask Stacy.
Recently, I found out my wife acquired a substantial amount of debt on my credit cards. We’ve been married for 14 years, have a mortgage and a small business. Do any of these debt relief programs work? I’m not looking to have my amounts reduced – it’s owed. Yet I need help to be pointed in the right direction. It’s not the credit card companies’ fault. I usually keep a small or no balance on my cards. Now I’m at a loss for words and feel overwhelmed and frustrated. What a shock to find out this information. Thank you for your time. – Ron
Sadly, I’m asked a variation of this question almost every week – although yours also raises a separate question you didn’t ask, and which I’ll get to in a moment.
The answer to your question, Ron, is yes – a debt relief company can potentially help you. But be careful which company you pick. For example, if you’re considering hiring a debt settlement company, don’t. I spell out the argument in Should You Consider Debt Settlement? (A debt settlement company even called me a “fraud” for my stance, which has since been backed by the Government Accountability Office.)
My recommendation is that you head to the nearest non-profit Credit Counseling Agency. Why are they so much better than for-profit debt settlement companies? I explain the advantages in Help With Debt: Credit Counseling. Credit counseling is low-cost: free advice, and if you need to enter into a program to repay your debts, called a Debt Management Program, or DMP, the fees are low – probably less than $50 to start and less than $50 a month.
But keep in mind that non-profit doesn’t automatically equal reputable. I’d start your search with an agency that’s a member of the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies – visit either website for a searchable list of members. But don’t automatically assume they’re all good either: talk to a few on the phone and compare them – ask a counselor what they think you should do given your situation, how much that solution would cost, what it would do to your credit history, how long it would take, etc. In other words, as you (hopefully) would when selecting any professional for assistance, interview several and select the one that feels right.
Obviously, if your wife ran up more debt than you can ever hope to repay, you need to consider the nuclear option: bankruptcy. That’s a last resort, but in the right circumstances, it’s the right choice. (Read “How Ron Dealt with Debt: Bankruptcy.”)
And now the question you didn’t ask: How will this affect my marriage, and what can I do about it? I’ve said this before: Like drug addiction or extramarital affairs, debt – especially the kind that’s kept secret – can play a major role in destroying a marriage. I remember this study last year from The National Marriage Project at the University of Virginia. These words rang so true…
Consumer debt is an equal-opportunity marriage destroyer. It does not matter if couples are rich or poor, working class or middle class. If they accrue substantial debt, it puts a strain on their marriage. When individuals feel that their spouse does not handle money well, they report lower levels of marital happiness. They are also more likely to head for divorce court – the likelihood of divorce 45 percent for both men and women.
The point, Ron, is that there are major issues here other than debt. There’s a reason your wife ran up these cards – more to the point, there’s a reason she didn’t tell you about it. Credit counseling will help you deal with the results of her actions, but not her motives. Leave that stone unturned, and you’ll end up in the same place a little farther down the road – only poorer.
So as you deal with the debt, deal with the causes. Use this as an opportunity to uncover what’s really going on with her, and between the two of you. Crisis creates an opportunity to fall apart, or grow together -I hope you two grow. All the best!