What should you do when you’re hiding credit card debts from your spouse and you’re having trouble making payments? Take these steps to come clean with your spouse and tackle your debt problem together.

by Gary Foreman

After 50 Finances,
My husband doesn’t know that I have run up credit card debts to a very hefty sum. I would like to pay these off, but I am really having trouble. I have cut down my spending considerably, but it doesn’t seem to make a dent.

I also own some stock in one company that, if I sold all of it, would cover the credit cards. But that means taxes on it. How can I get out of this mess I have created for myself?
Jill

Let’s first look at the personal aspects and then we’ll consider what financial options Jill has available to her. We’ll assume that her goal is to handle the debt and protect her marriage.

As Jill is well aware, she can take one of two paths: tell her husband about the debt or continue to hide it from him. Neither path allows her to avoid or ignore the financial problem.

Reasons To Come Clean With Your Spouse

We’ll begin with a disclaimer. We give financial, not marital, advice, so I want to be careful. But it seems to me that a healthy marriage would be better able to handle a confession than the deception that comes from hiding the debt. One deception usually leads to more. Not generally good for a relationship.

There are other reasons to get the debt out into the open. It will be easier to create and execute a strategy to pay it off if both partners are involved.

These financial decisions will have a big impact on the whole family. Does either partner have the right to make that big of a decision without consulting their mate?

There are legal reasons as well. If the debt is on a joint credit card account, creditors could come after him for payment. And both of their credit ratings are being affected.

Besides, her husband may already be aware of the problem. It’s hard not to notice your spouse living beyond your means!

What if Jill is concerned about physical abuse or the collapse of her marriage if she admits what has happened? In either case, she needs to seek professional counseling. A trained expert can spot and try to defuse any potential crisis. Trying to ‘go it alone’ could be dangerous.

Options for Paying Off Your Debts

Jill has a number of financial options available to her. She mentions the first possibility: selling her stock and using the proceeds to pay off the debt. If Jill has owned the stock for more than one year, she may owe a capital gains tax. Remember that’s a percentage of the gain (difference between sale and purchase price). Not a percentage of the total amount of the sale.

That could be Jill’s best option, but if the stock was meant as a college or retirement fund, selling it now could cause big problems later.

Jill could choose to continue to pay off the debt a little at a time. She might want to estimate how long that will take. Bankrate.com has a simple calculator.

She could speed up the process by reducing the interest rate. Usually, the cheapest money to borrow (short of having a friendly rich uncle) is against your home. Jill could take out a home equity loan and use the proceeds to pay off the credit cards.

There is a danger to that. The newly paid-off credit cards will have a large unused credit line. Some people cannot resist the ‘call of the mall’ when that happens. Jill would have the option of calling the credit card companies and asking them to lower her credit limits, or she could just quit using or close the account.

One other thing for Jill to consider is that unless she’s the sole owner of the home, she’ll need to get her husband to sign a home loan agreement.

Jill may decide that, realistically, she can’t pay off the debt in its current form. In that case, she might want to consider contacting a credit counseling agency. Typically, they can negotiate lower interest rates for the borrower, but there is a cost. Her credit report will reflect that she did not pay per the original account agreement.

If her situation is really bad, bankruptcy is an option. In that case, she’d almost certainly have to let her husband know that’s what she was doing.

One side note. If Jill accumulated the debt by unnecessary spending, she needs to get that under control. No matter what else she does. If she continues to spend beyond her means, her problems will continue to get bigger and harder to solve.

So what should Jill do? It really depends on how big the debt is and the strength of her marriage. Everyone who’s married would like to think they could bring a problem (even one they helped create) to their partner and get a sympathetic and helpful response.

Let’s hope that Jill has that type of relationship. Because if she does, the easiest way to get the credit card paid off is to work side by side with her spouse. Regardless of which financial strategy they choose.

• Are You Financially Unfaithful?
• How Couples Can Minimize Retirement-Related Financial Conflict
• Escaping Credit Card Debt: $30,000 Conquered
• Could Debts Ruin Your Retirement?

Reviewed September 2024

About the Author

Gary Foreman is the former owner and editor of the After50Finances.com website and newsletter. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.