Ways to financially protect self from overspending spouse

My friend’s wife can’t control her spending. She has maxed out several credit cards and is carrying several student loans. Although she is in school, she uses the loan money to buy things like a hot tub, fancy clothes, vacations and crafting supplies. He has tried talking to her many times but she doesn’t make any changes. He’s now thinking of tapping into his IRA to try to pay down all the debt.

Is there a way for him to lock down her ability to get credit? Of course he can cut up the credit cards, but what’s to stop her from opening more? And the same with student loans. He really needs the ability to prevent her from getting access to money that is not hers so they can work through this issue.

Divorce? :slight_smile:

I can’t think of any legal way to deny someone credit, especially your spouse.

Good article about exactly this situation here.

Separate accounts for credit cards, checking, and every other financial resource they currently share. Your friend’s wife is a student, but does your friend have a job? If she wrecks her credit rating, he should be able to protect his (somewhat) this way, and it should also help him control at least some of their shared assets, as well as his income (if any).

Maybe get her into counseling of some sort? Marriage counseling, and/or something else for people who are bad at managing their finances?

Separate bank accounts, separate credit, separate responsibilities for who pays what bills.

Hell, when I was married I paid off over $40k of my wife’s debts, then took over pretty much everything so that the only things she had left to pay were the Electricity, Gas and Phone. I paid everything else including food. With an income of $1100 per month, she then managed to overdraft her account six months in a row, while carefully destroying her statements so that I couldn’t see what she was spending it all on. Nevertheless, I never complained, I simply walked down to the bank and put barely enough into her account to cover it - not enough to give her anything else to spend.

At the end of that time, she started to claim that the bank was STEALING her money, while again destroying all statements so that I couldn’t investigate where it was all going.

Then she demanded that I put her name on MY accounts, so that she wouldn’t have this problem in the future. Of course, when I declined to do this, I was a great villain, a terrible monster, who was abusing her, blah, blah, blah.

  1. Separate bank accounts and responsibilities.
  2. Marriage counseling.
  3. Divorce.

Counseling might be a good first step. Maybe if a third party warned her of the consequences, she’d stop, or at least slow down.

He should cancel the cards she has, and sign up at Opt Out so she won’t get new offers in the mail. And he should watch their credit reports to make sure she’s not finding a way to get new cards.

Too bad something wasn’t done about this aspect of credit cards when Congress was looking at banking laws.

ETA: Chimera, I don’t think that’d be any protection if they live in a community property state. IANAL though.

My friend has a good job and could probably pay down everything if she would stop spending. His wife does have a job of sorts. She teaches some classes as she pursues her many degrees, but it doesn’t bring in very much.

But even if he separates the credit accounts, does that really matter? Would the CC companies only look at her income and credit rating? I thought they’d also consider his. How can he prevent her from getting new credit cards in the future?

Congress didn’t need to. The laws governing marriage are hundreds of years old and quite clearly define how assets and obligations are applied to spouses.

For the OP’s friend:

It is possible to put a hold on your credit that will prevent any new credit cards from being issued, which is even better than opt out lists. Talk to the credit agencies about the options for that, and about whether you can prevent your wife from calling them to request that the hold be removed.

But… ultimately, all of the advice you’re getting is like us saying “If your wife is an alcoholic, just pour out all the booze in the house and tell her not to go to a bar.” It may help to remove temptations, but it will not solve the problem without her cooperation. The root issue that has to be addressed is why she’s compulsively spending.

Quite frankly, my solution would be to divorce her immediately and to amicably continue the relationship under the understanding that I’d consider remarriage only after she can establish a two-year track record of responsible spending.

Whatever you do, do not take money out of your retirement accounts for her. Not ever! No matter how high the interest is. No matter how necessary it seems. Retirement assets are protected by bankruptcy laws. Do not ever use retirement money to pay off unsecured debt for a person like this. I cannot be more emphatic about that.

If you have a house, the same goes for refinancing or using home equity. Do not pay off unsecured debt with secured debt. Ever!

I don’t think he can. However, once their joint accounts are closed and separate accounts are established, she won’t be able to open new accounts for both of them without his consent. And when she destroys her own credit, no one will ever give her another CC.

See, this is why I think marriages should expire automatically every tean years (with options to easily re-up).

I seem to recall that the process of just having your credit checked too many times in too short a period of time can lessen/ruin your credit.

That might be a mechanism for cutting off the credit flow. Whether that is true or legal or moral for that matter I have no idea.

Having your credit checked in response to an application for credit is an item that ends up on your credit report. Many such hard pulls in a short time period may reduce your credit score, by a small amount, temporarily. The factors that actually matter, though, are the number of derogatory reports (late and non-payments), one’s debt utilization ratio, and the age of one’s accounts and how long they have been in good standing.

A much more effective mechanism for cutting off credit flow is to not pay your bills. :wink:

I have no advice on how to fix the actual problem. But from your end at least…separate accounts are important, but might not be enough. Putting a hold on your own credit is probably essential too.

My husband’s first wife screwed them up financially. This was over 14 years ago, so it may not be do-able anymore, but when he left her he discovered that they were more than $40,000 in debt due to credit cards and loans she had taken out in both of their names (making him equally liable). I am not sure if she forged signatures or how exactly she managed to get joint credit cards (she could not get separate credit cards because she had no income at the time) but she did. It was almost funny for him to find out just how many credit cards he had and how many accounts he owed on when he thought he was being responsible- he had one credit card and a gas card, both of which he paid off each month and he thought that was it.

My husband ended up filing bankruptcy over it- it was that bad.

So my only advice is to keep everything as separate as possible, make sure you know about any and all credit that might be applied for in your name and keep a close watch on your own credit. Other than that I am not sure there is much to be done unless your wife is cooperative with it.

Just to make it clear–this isn’t my wife with the problem. It is a friend. He’s the type who tends to let people take advantage of him, so it’s sort of his own fault for getting into this mess. I wanted to talk with him about ways to protect his financial security. I’ll tell him the advice people have given here.