Debt Review And Marriage
Planning your financial future with your partner is a big part of any relationship. Marriage links two people together and one way or another it also links their finances and debts as well. Dealing with finances in a relationship can be tricky and every couple has to find their own balance. It is vital that money management be part of any couple’s monthly routine. Good communication can really help reduce money stress within a relationship.
When your financial situation changes for the worse
If managing money is tricky when things are going ok, then wait till things are not running smoothly and troubled times strike. This can place a lot of strain on your relationship and inaction is often the worst option. Many consumers, fortunately, begin to consider debt review in order to deal with their debts. However, your partner might be over-indebted and is perhaps thinking of entering the debt review process, but what should you do if you are not over-indebted?
What should I do when my partner is over-indebted, but I am not?
What are your options, as a couple, when thinking about debt review. What happens when all the debt is in the name of one partner and not the other? Let’s consider a few factors that could influence what you decide to do.
What does the Law say?
How does debt review apply when you are married in Community of Property?
In the event that you are married in Community of Property (CoP) or according to a traditional marriage, both of you would have to apply for debt counselling and follow the process together, irrespective of whether or not both of you are over-indebted. According to the law, when married in community of property, you are classified as one single joint estate and all your assets and debts are considered as joint too. It is very seldom that, in this situation, only one of you would be over-indebted, usually the debt belongs to both of you.
Once you and your partner enter into debt review, both will be responsible for the repayment of the restructured monthly instalment.
How does debt review apply when you are married with a marital contract in place?
If you are married with a marital contract, you are not obligated by law to go under debt review together with your partner, if you do not want to. This doesn’t mean that you or your partner’s finances are totally ignored during the debt review, however. Your combined monthly household income (including your partner’s income) will be taken into account when the Debt Counsellor considers your financial means and works out a new a restructured debt payment plan.
‘Your combined monthly household income…will be taken into account when the Debt Counsellor considers your financial means’
The debt review process could still affect you even if it is technically only your partner who is over-indebted and cannot afford to repay their debts each month.
In the case where your partner wants to include a debt that you are both responsible for (where you both signed the credit agreement), you would then both need to apply together to benefit from the debt review. These are usually large debts, like Home loans or maybe vehicle finance. Concessions made with regard to monthly fees and interest rates by credit providers on these accounts makes it well worth considering entering debt review together.
Your Debt Counsellor will be able to guide you both through what the best course of action is – whether to both apply or if only one should apply and get the benefits. With debt review, you get the benefit of lowering the required monthly debt instalments, and your debt gets consolidated into one easy, affordable monthly payment which is easier to manage.
When feeling the consequences of your partner being over-indebted, it is important to understand the pros and cons of the debt review process.
‘This allows couples to work together to defeat their debt rather than one partner trying to handle all the stress of mounting debt’
Getting good help is key. A realistic and reasonable budget that all in the family can stick to can be a great start. Debt Counselling firm Cyber Finance say that they help couples (whether CoP or Contract) both work together to work out an affordable monthly budget. They take practical steps like suggesting ways to cut down on monthly costs, and if possible, help clients put something aside each month toward unplanned expenses that arise. This allows couples to work together to defeat their debt rather than one partner trying to handle all the stress of mounting debt.
So Many Benefits
Under debt review, you have legal protection from being harassed by your creditors. They should not contact and pester you or be able to repossess your assets. You will finally have peace of mind, knowing your debt is being taken care of responsibly, and you and your belongings are protected.
‘While under debt review, consumers are not able to make new debt and thus get themselves even further into trouble’
While under debt review, consumers are not able to make new debt and thus get themselves even further into trouble. This helps ensure that the existing debt gets paid off in the shortest possible time rather than consumers getting trapped in a cycle of taking on more and more debt to pay existing debt. While more debt is bad, paying off debt through debt review is good.
Debt review can give you a chance to significantly improve your financial situation within a short period of time. It also allows you to work together as a couple to improve your income situation without all the stress of worrying about unpaid debt and pending legal action. Another benefit is that once you have completed the debt review process, no one will know that you were under debt review, and you will have a clean credit record. At the end of the process, Debt Counsellors issue you with a clearance certificate showing that you are no longer over-indebted. Finally, you can start a debt free future.
As a couple, it is important to work together to deal with your finances and tackle any growing debt head on rather than hide debt from one another. Good team work and the right assistance when needed can help make sure money woes do not threaten your relationship.
If you have found this article informative and wish to learn more, feel free to contact an NCR Registered Debt Counsellor (like Cyber Finance who kindly contributed to this article) for an obligation free consultation. You can find a list of Debt Counsellors in each issue of Debtfree Magazine in our Service Directory Section at the back of the mag.