The COVID-19 pandemic has put an enormous strain on many love relationships. But at a time when many households are struggling with lost income or reduced paychecks, finding out your partner’s hidden debts can be the last drop.
The effects of financial infidelity on a relationship can be devastating. Ask anyone who has woken up with this unromantic surprise that their partner has had a secret debt for years.
While debt fraud is not as common as an extramarital affair, it is more common among Canadian couples than is thought. A pre-pandemic study conducted by Rates.ca found that one in five Canadians committed financial infidelity by keeping a secret about money. No less than 17% admitted that the monetary value of their secret debts exceeded $ 10,000. A similar study by CreditCards.com found that debt fraud is more common among millennials. 51% of them admitted to having pulled the wool over the eyes of their partner when it came to money matters.
It’s the thought that counts
A secret could mean that you are hiding the $ 100 you owe a friend on a bet from your spouse. It could also mean that $ 50,000 amassed as a result of an extravagant lifestyle is being deliberately kept secret. But the problem with fibbing isn’t just the amount of debt.
Regardless of the extent of the mendacity, a breach of trust can have serious consequences, including divorce. Not to mention, one partner’s creditworthiness can be damaged due to the significant other’s financial indiscretions, especially if the couple has pooled their finances.
As uncomfortable as it may be, the idea of having frequent and open discussion about money is undeniable. “Ideally, there should be no hidden debt in a relationship,” says Tina Teheranchian, Senior Wealth Advisor at Assante Capital Management.
The amount that could be a deal breaker would depend on each partner’s tolerance for any kind of secrets in a relationship, she adds.
It may hint at the obvious to say that honest communication about money is critical to a happy relationship, but it needs to be repeated.
“Partners usually keep their debts a secret because they are ashamed of being in debt,” says Teheranchian. “If the debt arose during the relationship without the other partner’s knowledge, then you have broken your partner’s trust as well, which is another reason to feel ashamed and want to hide the debt.”
Look before you jump
If you are planning on entering into a long-term relationship, don’t leave an in-depth discussion about finance off the table. Being open with your partner about an unpaid debt is crucial. Ideally, bring it up before making a long-term commitment. “Solid relationships are built on trust and confidence, and being open and honest from the start helps create a solid foundation for an enduring union,” said Teheranchian.
Hiding debt can make one partner feel like they look better in the other, “but it puts the entire relationship at risk of breaking up due to an abuse of trust,” she adds.
Have the conversation
In a relationship, don’t let it be too late to talk about finances. Provide full financial disclosure before getting married and merging your finances with your partner. “Being open and honest about your finances is a good strategy both at the beginning of a relationship and as an ongoing policy,” notes Teheranchian, emphasizing, “Nobody wants to be in a relationship where their partner lies to them about their finances, no for whatever reason. “
Also, keep the conversation going. Set boundaries and discuss goals together and do a joint financial check at least once a year to find and fix problems.
Better Safe Than Forbearance is a good guideline, especially when it comes to finances. For that, it wouldn’t be a bad idea to get a prenuptial agreement or a prenuptial agreement. It might not be the most romantic way to start a life together, but it could provide an effective safety blanket when relationships turn sour because of a partner’s undisclosed debt.
“If you have an iota of doubt that your partner could marry you because they are more interested in your money than you, you should get a prenup or prenuptial agreement to remove those doubts,” argues Teheranchian.
The longer people wait to uncover their secret debts, the harder it gets and the worse the consequences. The only way to get around it is to do it.
Life after debt
Sooner or later the truth will catch up with you. “If the truth finally catches up with you, it will unfortunately be too late and the basis of trust in the relationship would be tarnished, no matter how you try to explain the situation,” warns Teheranchian.
The road to salvation may be long, but the steps below can help clear some of the damage that has been done to your relationship and help you sleep better at night.
Confess: The loss of trust in a relationship is likely to last longer than your credit history. So it might be a good place to start by admitting yourself to your iniquity. And the sooner the better. “It is always better to get clean as quickly as possible and decide together with your partner on a strategy to reduce debt,” says Teheranchian, emphasizing, “that could actually help to cement the relationship.”
Repayment, Repair and Reconstruction: Once you’ve got that big admission out of the way, it is time to put in place an amortization plan to defuse the debt bomb. “Partners can and should work together to create an amortization plan, discuss the debt with their financial advisor, and develop the best strategy for eliminating the debt,” says Teheranchian.
There are also online debt settlement calculators that can be used to evaluate various debt settlement strategies.
Hidden debts can cause more serious problems than mortgage rejection. “It is always better to voluntarily disclose your financial infidelity than to be discovered,” says Teheranchian. “Your partner is more likely to understand that you made mistakes as a person and are now honest and don’t want any secrets.”
But if you keep it a secret until exposed, it would be extremely difficult to regain your partner’s trust, she warns. It can be difficult to resolve bad debts, but some steps can be taken to correct the problem. The same cannot be said to mend a broken heart or a broken home.
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