Category Archives: Debt

Am I still liable for my spouse’s debt after divorce?

A husband and wife buy a house together. Their marriage takes a tumble, along with their ­finances, and they have to sell their home and are left with an outstanding mortgage bond. They subsequently got divorced. The couple is concerned about what will happen to the debts and who will be ­responsible for paying them.

Who pays what after divorce?

If the couple was married in ­community of property, the debt on the property is a joint debt. They will be jointly and severally liable. This means that each partner is not just liable for half the debt now that they are divorced, in fact the bank can seek the full amount from either of them. The one spouse who is held liable by the bank would then have a claim of 50% of the debt against the other, but it would be his or her responsibility to collect that debt (not the bank’s). Alternatively, the bank may agree to accept 50% from one person and release them from the ­liability, but it does not have to.

Sometimes, the divorce settlement makes a special mention of the mortgage. But if there is no clause in the divorce, the joint liability principle applies. After a divorce, the husband and wife should present their bank with a copy of the divorce settlement. This will remove any uncertainty about ownership and liability for bond payments.

Getting divorced while under debt review

If you get divorced while you are under debt review and you have the debt review court order in place, then this will need to be rescinded and for new debt counselling applications to be started, as in order to follow on with the debt counselling process you will need to reapply, but will now need to be seen as two single applications. A new budget and new proposals will also have to be drawn up.

References:

“Debt And Divorce”. News24. N.p., 2017. Web. 12 June 2017.

“Debt Review After A Divorce Settlement – Debt Review”. Debtbusters. N.p., 2017. Web. 13 June 2017.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE

Do my debts last forever?

Prescription was introduced as means of protecting South African consumers from dishonest credit providers, who are responsible for recklessly lending credit and have contributed to the detrimental debt crisis many South Africans face today.

What does prescription mean?

  • The Prescription Act 68 of 1969 (PA) says that a debt (payment of money) is extinguished/expired after the lapse (passing) of a specific time period.
  • South Africa has different laws which specify time periods, for example, the PA says contractual and delictual debts extinguish after 3 years from when prescription starts.
  • Prescription may be delayed or interrupted.

It is important to bear in mind that not all debt prescribes after a period of three years. Debt related to a cheque, for example, only prescribes after 6 years. The purpose of prescription in South Africa is to compel creditors and collections agents to collect money owed to them within a specified period and not delay collection so that it accumulates massive amounts of interest and costs.

What are the consequences of an extinguished debt?

  • The debtor is not liable to the creditor for a debt after the time period has lapsed.
  • The creditor may not institute legal action against the debtor for a debt.

When does prescription start?

As soon as the debt is due (a debt is due once the creditor can identify the debtor and the facts from which the debt arises).

  • If the debtor prevents the creditor from gaining knowledge of the debt (excluding debts arising from agreements) prescription runs from when the creditor has knowledge of the existence of the debt.

An important point to remember is that it’s perfectly legal for a debt collector or attorney to demand payment for a prescribed debt. It is up to a debtor to raise prescription as a defence.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Credit Bureaus: Can I be blacklisted?

There is no such thing as a blacklist. It simply means that there are negative data on your credit report that is hosted at a Credit Bureau. This negative data can be anything, from a plain collection on one of your loans right through Judgment data or even Debt review.

This negative data will have an impact on your ability to get loans or open retail accounts as the credit provider will see this negative behaviour towards your current credit as a potential way that you will handle their loan; if granted.

A Credit bureau is an organisation that keeps a record of your credit information. Your credit record shows how you manage your debts and is used by credit providers and moneylenders to decide if you can afford to borrow money or pay back a new loan.

The National Credit Act says each credit bureau must be registered with the National Credit Regulator – who decides how your credit information can be used and who can see your credit record.

What is the role of a Credit Bureau?

When you take out your first loan with a credit provider, you have to fill in a form that asks for consumer credit information – including your credit history, financial history, education, employment and identity details. This information, and the details of the loan, is given to a credit bureau that then puts together credit report.

What are your rights regarding a Credit Bureau?

  • To be told that a credit provider intends to report negative information on you to a credit bureau 20 working days before they do so
  • To get a copy of your credit record from a credit bureau when you ask for it – you can get one free record each year but may be charged a small fee for further records
  • To challenge information kept by a credit bureau if you are unhappy with it
  • For your information to be kept confidential, and for it to be used only for the purposes that are allowed

How can your credit information be used?

  • To decide whether or not you can afford credit
  • To investigate fraud, corruption or theft
  • To consider you for employment in a position that requires trust, honesty and the handling of cash or finances

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Die sekwestrasieproses

A2_bDie sekwestrasieproses behels ‘n hofaansoek. Die Applikant in die aansoek is óf jyself vir jou eie sekwestrasie (vrywillige boedeloorgawe) óf die Applikant is ‘n skuldeiser van jou (‘n vriendelike of aggressiewe skuldeiser). Die aansoeke is feitlik dieselfde en alhoewel daar verskillende vereistes vir elk is, is die effek dieselfde.

Vrywillige boedeloorgawe

Dit verwys na die proses wanneer ‘n natuurlike persoon ‘n aansoek bring om hom/haarself onder sekwestrasie te laat plaas.

‘n Persoon is insolvent as sy/haar laste sy/haar bates oorskry, en dan kan hul aansoek doen vir ‘n vrywillige oorgawe van sy/haar boedel. Enigiemand kan op enige stadium sodra hy/sy insolvent is, aansoek doen vir ‘n vrywillige oorgawe, selfs al is hulle byvoorbeeld onder skuldberading.

Die persoon wat aansoek wil doen om hom/haarself te sekwestreer, sal ‘n beëdigde verklaring moet aflê wat verduidelik waarom hy/sy beweer hy/sy is insolvent. Dit sal opgestel word deur die prokureurs wat die aansoek namens die Applikant sal bring. Sodra die beëdigde verklaring geteken is, sal die aansoek deur die Hof uitgereik word en ‘n hofdatum sal gegee word. Die Applikant hoef nie in die Hof te verskyn nie,  want die prokureur verskyn namens hom/haar.

Indien die Hof ‘n bevel toestaan op die eerste hofdatum, sal dit ‘n voorlopige bevel wees en die saak sal uitgestel word vir ongeveer ‘n maand. Gedurende die maand sal kennisgewing aan alle krediteure gegee word en indien niemand teen die keerdatum die aansoek teengestaan het nie, sal die bevel gefinaliseer word en die persoon sal gesekwestreer word.

Verpligte sekwestrasie

Verpligte sekwestrasie behels ook ‘n hofaansoek, maar die Applikant moet ‘n skuldeiser van die skuldenaar wees. As dit ‘n skuldeiser is wat nie ‘n goeie verhouding met die skuldenaar het nie, verwys ons daarna as ‘n “aggressiewe” sekwestrasie (byvoorbeeld die bank).

Die banke bring selde sekwestrasie aansoeke teen die gewone skuldenaar, omdat dit baie goedkoper en makliker is vir hulle om die invorderingsprosedures te volg: lê beslag op eiendom en verkoop dit en/of lê beslag op jou salaris.

As dit ‘n skuldeiser is wat ‘n goeie verhouding het met die skuldenaar, verwys ons daarna as ‘n “vriendelike” sekwestrasie (byvoorbeeld ‘n familielid of ‘n vriend aan wie jy geld skuld).

Aggressiewe (“onvriendelike”) sekwestrasie

Waar ‘n onvriendelike skuldeiser ‘n sekwestrasie aansoek bring teen ‘n skuldenaar, verwys ons daarna as ‘n aggressiewe sekwestrasie, maar dit is steeds ‘n gedwonge sekwestrasie, in teenstelling met vrywillige boedeloorgawe.

Die skuldeiser wat die aansoek bring, moet ‘n eis teen die skuldenaar bewys; met ander woorde, die skuldenaar moet inderdaad geld aan die skuldeiser verskuldig wees. ‘n Tweede vereiste is dat daar ook ‘n voordeel vir krediteure moet wees. Derdens moes die skuldenaar ‘n daad van insolvensie gepleeg het.

As ‘n skuldeiser ‘n aggressiewe aansoek bring teen ‘n skuldenaar, kan die skuldenaar die aansoek teenstaan indien hy/sy nie insolvent is nie, of as daar ‘n ander rede is waarom die bevel nie toegestaan moet word nie.

Proses vir “onvriendelike” en “vriendelike” sekwestrasies

Die proses vir beide hierdie aansoeke is dieselfde, net die Applikant verskil.

Soos met vrywillige oorgawe, moet ‘n beëdigde verklaring deur die skuldeiser geteken word om te verduidelik waarom hy beweer dat die skuldenaar hom/haar geld skuld. Hy sal ook bewyse daarvan moet gee (kontrak/verklaring), asook  bewyse dat die skuldenaar ‘n daad van insolvensie gepleeg het (bv. waar die skuldenaar ‘n brief geskryf het om te sê dat hy/sy nie die skuld kan betaal nie). In beide gevalle moet die Applikant bewys dat daar ‘n voordeel vir krediteure sal wees as die skuldenaar gesekwestreer word.

Sodra die verklaring onderteken is, sal die nodige dokumentasie opgestel word, deur die Hof uitgereik word en ‘n hofdatum verkry word. Sodra dit gedoen is, sal die dokumente op die skuldenaar, werknemers van die skuldenaar, Meester van die Hooggeregshof en die Suid-Afrikaanse Inkomstediens beteken word deur die Balju. Die voorlopige bevel moet ook by wyse van geregistreerde pos aan alle skuldeisers bo R5 000.00 gegee word. Indien die aansoek nie teengestaan word nie, sal ‘n finale bevel gemaak moet word vir sekwestrasie van die skuldenaar/Applikant.

Hierdie artikel is ‘n algemene inligtingstuk en moet nie gebruik of staatgemaak word op as professionele advies nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of vir enige verlies of skade wat voortspruit uit vertroue op enige inligting hierin nie. Kontak atyd jou regsadviseur vir spesifieke en gedetailleerde advies.

How to manage your debt

A1_bAlecia had big financial problems; she had too much debt and her expenses outweighed her income. She decided to open a new bank account into which her salary could be paid, which would ensure that she could manage her salary before her monthly debit orders went off.

Alecia thought it would be a good idea to pay her small debts off first and then begin with the larger debt. Unfortunately this resulted in her not making any payments at all on her home loan and credit card and the bank threatened to blacklist her and sent her a summons. The bank then made an application in court for an order that made it compulsory for her to pay the amount which the bank set out; this order is called an Emoluments Attachment Order (EAO) or garnishee order. An EAO is granted in terms of s. 65J of the Magistrates’ Courts Act 32 of 1944 and orders an employer (referred to as a garnishee) to make deductions from a debtor’s salary or wages and pay these over to the creditor or its attorneys. This amount was much greater than Alecia could afford and left her with no income for the rest of her monthly debt payments. She was thus put in a worse financial position than before.

If Alecia had known about debt counselling sooner she would not be stuck in the position she is now facing. It is important to educate people about debt counselling, especially in a country where debt is granted so easily and yet so hard to pay back. Debt counselling is a process of assisting consumers that are experiencing debt-related problems and are having difficulty making their current monthly payments, by providing budget advice, restructuring their payments, negotiating on their behalf with credit providers, monitoring their payments and providing aftercare services.

It is the duty of the Debt Counsellor [who is registered with the National Credit Regulator (NCR)] to assess whether the consumer is over-indebted by weighing the income and expenses and then taking into account statutory and non-statutory deductions as well as existing monthly debt payments. If the calculation results in a negative balance, the consumer is declared over-indebted. The debt counsellor provides a proposal that lowers the debt payments and increases the cascades (the number of months allowed for repayment of the debt, inclusive of interest), in order for the consumer to be able to manage his debt while paying it off at the same time. An order is then granted in court and sent to the credit providers, and the consumer can no longer incur any new debt. Once the debt is paid off, the consumer is given a clearance certificate and he/she has all that extra income to buy goods in cash.

Unfortunately, it was too late for Alecia as legal action was already taken against her. The same applies if a termination letter is sent in terms of s.129 of the National Credit Act. It is important for people to know that there is a way to manage their debt, but they need to acknowledge that they are in financial trouble before they are placed in a situation like Alecia. It may be too late for Alecia, but hopefully it won’t be too late for others.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice