NEW MARRIAGE, DEBT AND DEBT COUNSELLING - 2019
You found your soul mate and you decide to get married. The problem is you find out your new partner had some difficulties with debt in the past and is in currently in debt. Please read the information below to understand how your partners’ debt affects you and if debt counselling can be a solution.
Getting married usually means combining many aspects of your financial life. So if your current or future spouse has a lot of debt, this is going to impact you as well.
Debt adds enormous amounts of unneeded stress to a healthy relationship and makes arguments over money much more likely. It is important to address debt and financial issues upfront as early as possible. Below are a few tips to help you through the process.
Discussion about how debt will affect your future financial goals
If a partner is in debt all aspects of your joint financial life will get affected. For example, you won’t be able to buy a family home as the debt will make both you and your spouse over-indebted. The home loan application will get declined as credit providers will perform an affordability assessment as required by the National Credit Act (NCA).
Your new financial partnership will also not have extra money available to devote to other goals like saving for retirement, starting a family or planning overseas trips. Most of the disposable income will go towards servicing outstanding debts.
Deciding how to handle the repayments
The most obvious solution to debt problems is for both spouses to combine their respective incomes and tackle the debt problem head-on. This requires both parties to get invested in this joint goal with both parties agreeing to work on it. This will speed up the process of ensuring the new partnership is debt-free.
There may be the situation that one partner may not want to contribute any of their spare disposable income to go on their new partner’s debt. Both parties may agree to have separate financial lives in order for them to do what they want with their own money. If this is the case, make sure that both are in agreement with the idea that the debt will be the responsibility of the partner who made the debt.
Plan how future life events such as having children could affect your payoff plan
While your partner with debt may have great plans to pay off his or her debt, you might think in a few years that he or she will become debt-free, life is unpredictable. Both partners need to cater and make plans for life’s little unexpected surprises. For example – the spouse with the debt obligations might get retrenched and stay unemployed for a period of time. Communication is vital upfront if the other spouse without debt will take over and service the debt while the other spouse remains unemployed.
Both partners need to be on the same page about how you plan for unexpected contingencies and how you will adjust for unforeseen circumstances while making sure the debt gets paid.
Without clear and open communication channels about debt, the new marriage stands a great chance in dissolving and divorce. Research shows that carrying consumer debt in a marriage will definitely harm a marriage, especially if the spouses fight about the debt situation. In a study of more than 4 500 marriages, researchers saw that couples with high debt fought more often about money and finances and this, in turn, created much lower marital satisfaction. In general, fighting over financial issues in a marriage is a major cause of divorce. Money and financial distress is the number one contributing factor to divorce.
The same study also showed that paying off the debt linked to increased marital satisfaction.
Budgeting in the marriage
Make a budget that includes the debts of your partner and ensure you create a budget you can afford with a comfortable lifestyle while still paying off the debt. This is crucial if you plan to keep your bank accounts separate.
Sit down and work out what you're going to invest, save, as well as how much you are going to pay towards the debt. This will ensure your budget is reasonable and agreeable to both parties.
In some cases, it is important for you to ensure that the legal liability you share for your spouse’s debt does not remain stuck if you end up getting a divorce or due to the unfortunate event of the death of your spouse.
Although nobody wants to think about this, you have to be practical and safeguard yourself in the marriage, particularly if there is a large income gap between you and your spouse.
Debt Counselling is a confidential programme which assists with finance-related issues and situations. This option should be a consideration.
Consider speaking about a prenuptial agreement with an attorney to protect yourself in the event of divorce. It is definitely not one of the most romantic conversations to have, but if something goes wrong it could save you from detrimental financial loss. Take these steps as soon as possible to ensure the debt will not hurt your relationship.
Married in community of property and the debt counselling process
If you are married in community of property, both of you would have to apply for debt counselling and follow the process jointly even if only one of the spouses is over-debted. In terms of current legislation if you are to get married under community of property you will be categorized as having one joint estate. Once you decide to tackle your financial debt problem using debt counselling, you and your partner will be both responsible for repaying a restructuring monthly instalment under debt counselling.
It is important to prioritise your relationship and marriage. Getting out of Debt requires dedication, but it should not be at the expense of your marriage. Always keep your relationship first and make sure your spouse knows that he or she always comes first
Regardless of the financial difficulties you and your spouse might face, see it as an opportunity to develop your relationship further. Consider making use of our debt counselling programme to assist you and your spouse overcome debt.
Our innovative and legal services will assist in a seamless and easy transition from being over-indebted to becoming debt-free with debt counselling and debt review.
We guarantee that your debts won’t spiral out of control with the following services Credit Clearance, Debt Counselling, Debt Review, Settlement Negotiations, Credit Score Rehabilitation and Credit Reports from 4 of the major credit bureaus in South Africa.