Can Just One Spouse Sign Up for a Debt Settlement Program If the Other Is Unwilling?

It can sometimes feel like you’re carrying the weight of debt by yourself, even when you’re married and not truly alone. You may find yourself more focused on the numbers, the stress, and the long-term impact, while your partner has a different view of things. 

That disconnect is more common than you might think. Just as no two people are exactly alike, no two people respond to financial pressure in the same way.

If you’re in over your head financially and interested in finding help, you may wonder if you can enter a debt settlement program without your spouse. Yes, one spouse could enroll in a debt settlement program without the other—but only if the debt is in their name alone and state laws don’t make the spouse legally responsible.

Before moving forward with debt settlement, though, be sure to communicate with your spouse. They may not be fully aware of where you stand financially. Once they understand the situation, ask whether they’d like to join you in seeking a solution through debt settlement. If their answer is no, don’t be discouraged.

Here’s what you need to know about entering debt settlement on your own.

Individual vs. Joint Accounts vs. Authorized User

It pays to know the difference between account types.

• Individual account. Only one of your names is on the account. For example, if an account is in your name and your spouse is not a joint debt holder or co-signer, it’s an individual account. While creditors generally can’t come after you for debts solely in your spouse’s name, they may try if you share assets.

• Joint account. Let’s say there’s a debt you and your spouse both signed for jointly. You could be considered a co-borrower or co-signer, and both you and your spouse are responsible for ensuring it's paid. 

• Authorized user. A spouse may also be an authorized user rather than a joint owner. For example, you have a credit card account that's only in your name, but your spouse has a secondary card as an authorized user. They get their own card to make purchases, but they’re not responsible for paying the debt. If you’re an authorized user on one of your spouse’s accounts, only your spouse is responsible for paying the debt. 

The exception may be if you live in one of these community property states. If that’s the case, most debts incurred during the marriage are considered shared, meaning creditors may be able to pursue your shared assets for repayment, even if your spouse’s name is the only one on the debt.

Community property states include:

• Arizona

• California

• Idaho

• Louisiana

• Nevada

• New Mexico

• Texas

• Washington

• Wisconsin

Some states may let you opt in to community property rules or choose common-law rules instead.

Debts That Can Be Settled Without Your Spouse

If you have debts in your name only—and you don't live in a community property state or the debts are from before your marriage—you’re free to take those debts to a debt settlement company or negotiate with creditors on your own. 

Debt settlement isn't a painless process. It's smart to keep your spouse informed of what's going on and what to expect even if you're not enrolling your debts together. Here are some things to keep in mind about debt settlement:

• Fees. If you work with a company to negotiate on your behalf, you’ll usually pay a settlement fee. You should only be charged a settlement fee after you’ve approved the settlement agreement and at least one payment has been made to your creditor.

• Monthly payments. Typically, you’ll be required to deposit money into an escrow or dedicated account that you own and control. This money will be used to settle with your creditors. As you accumulate money in the account, the company will open negotiations.

• Halted payments. Depending on the company you work with, you may be asked to stop making payments directly to your creditors. Not only does this make it easier to place settlement funds in escrow, but it may also motivate creditors to accept a lower settlement amount. Missed payments could have a big negative impact on your credit scores.

In addition, a creditor can still pursue you for payment as settlement talks are ongoing. Such a pursuit could lead to a lawsuit, a judgment, wage garnishment, or a lien on an asset.

How Settlement Impacts Your Credit Score

Married couples don’t share a credit score. Enrolling individual debts in a debt relief program only affects your credit score—not your spouse’s, particularly if they’re keeping up with payments on any joint debts and their own accounts.

However, if you have joint accounts with missed or partial payments, both your credit reports could be impacted, no matter who incurred the balance.

Debt settlement can damage your credit score. In addition to missed payments, credit reporting bureaus, such as Experian, Equifax, and TransUnion, will receive notification that you’re settling for less than owed. These remarks can stay on your report for up to seven years, although they have less impact on your ability to secure new credit over time. These remarks won’t show up on your spouse’s credit report.

It can make sense to enter debt settlement alone when unsecured debt—such as credit cards or most personal loans—is solely in your name. Once you've completed a debt relief program, you can begin rebuilding your credit score. An improved score won’t happen overnight, but staying out of debt and paying bills on time could help you achieve a healthy score.