Thank you for your question about what to do about your spouse's debt. I appreciate all the details you provided. I am confident, based on what you shared, that the problem is solvable and that you are in a lot better position financially than most couples who deal with a similar issue. You also have dealt with some of the key relationship issues well, and in a short amount of time.
As I answer the specific question you ask, I will give you my best advice on what you should do, but will also expand my answer to address the points that other people who find out a spouse ran up debt without their knowledge can benefit from.
1. Establish Marital Communication and Address Trust Issues>
Not everyone likes suprises, even when it is a present or something good. No one likes finding out that his or her spouse has $16,000 of , "Surprise!" debt. This kind of news can cause a financial and marital crisis.
You and your husband had an existing bond of trust and finanical success, but that isn't a guarantee that this kind of issue won't lead to a communication breakdown, loss of trust, and a downward spiral.
The way that you dove into directly confronting the issue, looking at the statements and getting a clear picture of where things stand will make it easier to formulate a plan of action. If that kind of communication isn't present, this is the time to seek a professional counselor who will help define the outstanding issues and establish a way that communication can lead to a solution based on acknowedged responsibility and the desire to find a good solution, instead of things breaking down into recrimination and blame.
2. Get the Full Financial Picture
Again, in your case, you took the right first steps, getting a clear picture of what you owe and to whom. It is great that you can trust that your spouse is not hiding other debts. Not everyone is so lucky. Some people find out there is a problem, think that all the cards are on the table and then find out there are other debts that are not accounted for. There is nothing that can address this fully.
Even if you and your spouse pull your credit report to see as much information as possible, there are debts that don't show up on a credit report. A spouse could take out payday loans, pawn some property, or borrow money from family or friends and none of those debts would appear on the credit report.
Spouses that have any degree of distrust should pull theirr own credit report, to ensure that no accounts were opened in their name. After all, if the statements could be hidden for the debts in your spouse's name, it would be possible accounts could have been opened in your name and you wouldn't know.
3. Make a Budget
Debts are not the only part of the picture. Just as debts can be hidden from a spouse expenses can be hidden by someone paying cash. In your case, your expenses are on the credit card statements. The good news in that is that you are not being deceived. The bad news is that the expenses appear to be for regular living expenses. That means you are living on credit which is not sustinable over the long haul.
There may be a silver lining for you in that your husband's desire to keep you in the dark may have caused him to value his attempt to not worry you overthe financial impact of the debt. From what you described, if you have been living on solid footing for a number of years, you may have been budgeting for discretionary expenses that you can now trim, using the savings to pay down your debt. Now is the time to cut out, as much as possible. Take a look at your statements and see what you've been spending on going out to eat, family vacations, expensive holiday and birthday presents. Many credit card companies have tools for categorizing your expenses. Determining how much you can afford to pay toward the debts each month will play a huge part in finding a realisitic and affordable solution you can see through to completion.
The fact that you didn't know debts were piling up indicates to me that the two of you did not have a budget in place that you reviewed together. Now is the time to get one. There are a variety of budgeting apps that can make it easy to keep track of all your income and spending and to find the areas that may make sense to cut out.
You didn't say what state you are in, and, in your case, the issue of whether it is only his legal responsibility or if the debts are shared is not an issue. However, other people who could see this break a marriage would be well served in determining if they are in a community property state or not.
4. Review Your Debt Pay-off Options
Armed with an accurate budget, and a realistic assessment of what expenses you can trim, you should be able to come up with a dollar amount you can afford to pay toward the debt each month. Again, there is good news for you in this area. You were making all your payments on time. The bad news, that you ran up $16,000+ in less than two years time is not good news.
My rough calculation is that you need to find $800-$1,000 to cut out of your spending, as that is the monthly amount that would add up to the $16,000 in the time-frame you estimated. That is a pretty big reduction. Only you know if it is realistic, with serious belt-tightening. Then the question is how much can you put towards paying down the debt.
- Do It Yourself Payments - You can do the math, figuring out what you can afford to pay on the debt, what interest rate you have on your cards, and how long it will take to pay it off. If you are only able to pay minimum payments or a tiny bit more, looking for other solutuions that will accelerate your debt pay-off and get you out of debt for less money.
- Cash-out refi or HELOC- You have equity in your home, so it may be a good solution to use your equity to pay off your debt. I don't know the size of your mortgage, but interest rates are in the range of 1% higher than your mortgage. Your 3.375% mortgage indicates that you got in very close to the bottom of the market! Odds are high that you don't want to touch your current mortgage. Looking at a Home Equity Line of Credit is one option you should investigate..
- Unsecured Personal Loan- Because it makes sense to look at any viable option, see if you can get a personal loan with a lower interest rate than your credit cards and afford the payment.
- Consumer Credit Counseling- If the creditors you have are willing to offer you a substantially lower rate through a credit counseling service's Debt Management Plan, it could be viable alternative.
- Debt Settlement- In your case, I don't think this is the right solution, but for someone who doesn't have access to equity, can't afford the payments in a personal loan, and is looking for the lowest costs for getting out of debt while avoiding bankruptcy, debt settlement is a good option to consider.
You can use the Bills.com Debt Payoff Calculator, immediately below, to help you find the right solution.
5. Make a Decision and Follow Through
It takes a plan, dedication, and effort to solve any debt problem. When it arises from a spouse's choices and it is kept from you, it creates a much bigger problem.
If you work through the obstacles and get to the point where you are on the same page as to what kind of solution works best and is affordable, go for it. Then, stick with the program and see it through.
Life is full of reversals. It is part of the human experience. If you learn from what you go through and use this as an opportunity to thoroughly understand your finances, you can turn this crisis into a long-term gain.
Many people drift along, with no long-term financial plan or goal. When you slay a debt problem, you have an opportunity to use all the money you were using to pay off your debts to some other positive goal. Use it to invest, to put toward retirement, to spend intelligently on experiences that enrich your life but don't impoverish you.