debt review finances relationship

Advice From NCR Debt Counsellors – Approaching Finances in a Relationship

To be under debt review is often the best way out of financial hardship but there are ways to approach finances in a relationship to avoid total destruction.

Love & Money – How to Approach Financial Matters in a Relationship

On the best of days – and in general society – the topic of finances and money is already a sensitive subject.  Interweave this subject matter into a relationship or marriage, and it can become even more complicated, delicate and explosive.  We have often experienced this first-hand as NCR debt counsellors as many of our clients who sign up share in their debts – or are by default jointly responsible because their marriage is deemed ‘in community of property’. 

What can further exasperate the situation is when couples aren’t equipped to have the important discussions surrounding finances.  As financial strain can place a whole lot of pressure on a marriage or relationship, it is understandable that money matters fall among the top reasons why couple fight – and even separate.  As NCR debt counsellors, we frequently advise our clients on the subject and provide some insight into how to approach financial discussions.  We even offer advice on how to manage finances – particularly when undergoing the NCR debt counselling process

What’s Mine is Mine, What’s Mine is Yours Too…

As much as we’d love to romanticize this notion that ‘what’s mine is mine – and yours too’, when it comes to finances, it is not realistic. You can most definitely share your lives and what you’ve achieved – and even save together for a rainy day – but where many couples go wrong is when all the lines become too blurry, and disaster strikes.
Let’s take a moment to elaborate by using an example; you’re in a relationship where you’re living together, or you’re married, and one partner becomes insolvent. You’re now finding yourself in a position where everything you own was jointly purchased – your property, your household items, your vehicles… You perhaps even have joint bank accounts. This might seem like the natural way to go about it – until creditors seek to recoup losses and a court order allows for all assets to be liquidated.

Maintain Financial Separation for Self (and Mutual) Preservation

We live in a very uncertain time when it comes to financial health and one of the greatest saves is to maintain a separate financial status from your partner – and any registered debt counsellors worth their salt will advise you to follow this strategy.  We are most definitely not suggesting that you hide anything from your partner – we are however proposing that you sever some of the financial ties as an act of self – and mutual – preservation, as this would benefit you both should tragedy strike.  Here are a few factors to consider;
  1. Sign an antenuptial agreement – for most couples, the idea of getting married and having to sign an antenuptial agreement would almost suggest that you do not trust your partner, or that you don’t have faith in your union lasting. The thought pattern here should be the exact opposite.  By having an antenuptial agreement in place you could be shielding your spouse, and vice versa, in the event of financial calamity.  This should be the first step you take when you do get married as both parties will also instantly inherit each other’s debts.
  3. Maintain separate bank accounts – again, the notion of ‘sharing everything’, including having joint bank accounts, is an idealistic approach during a time where one should be realistic. If whatever authority decides to freeze your bank accounts, or worse – you would both be affected.
  5. Purchase household content separately and keep record – there are certain household items that, by law, no one can remove from your property – everything else is fair game though when the sheriff comes knocking with a court order to take inventory. This is where purchasing household items such as your lounge suite and other furniture, washing machine, fridge, tumble dryer, etc, separately can save you from ending up with an empty house.  It is imperative that you maintain record in the form of invoices, statements or proof of payments to prove ownership.
  7. Purchase vehicles separately – if you’re married outside of community of property, have your vehicle be in your own name. Vehicles will be on the list of things to confiscate when a court order is issued in order for banks or credit providers to recover losses, and you at least want one vehicle to be untouchable.
  9. Evaluate who is more at risk – further below we will discuss why it is so important to be open and honest when it comes to finances and that it is important to talk about money. One reason for this is to evaluate who is at most risk of and possibly financially vulnerable.  Certain professions, such as those termed ‘essential services’, are unlikely to become redundant and the risk of retrenchment is considerably lower when compared to some other professions.  Place ownership of property, possessions, and lines of credit in the hands of the more financially secure partner as a safeguard.
  11. Do not become financially dependant on your partner – although we do suggest that you have the more financially secure partner be the safeguard in some instances, we are not suggesting that you surrender financial control. You should still, at all times, be fully aware of all financial responsibilities and duties.  As an example; in the event of the demise of your spouse, you could find yourself in a situation where you have no idea how to take control of finances.  You might be unaware of monthly expenses, have no access to bank accounts and be unable to pay creditors.
Much of what we mentioned above does not even need to be factored in, provided that you have a valid and legal antenuptial agreement in place.  If you’re not married but you live together, take note of what we’ve discussed as it can save you a lot of hardship.  As an example, although South African law does not recognise common-law marriages as being valid – irrespective of how long you’ve co-habited – whatever items are in a shared household will be seen as jointly owned, unless you can prove otherwise.

End the Taboo and Talk About Money

Something often witnessed by NCR debt counsellors is that many couples get married without any knowledge of their partners’ full financial situation.  Many debt review clients are therefore unwittingly held liable for their spouse’s debts when they were unaware that they are over-indebted to start off with.  With no antenuptial agreement – when one partner applies for the NCR debt review process, both parties are affected.  This is why being transparent from the start is so important. 

If you are comfortable enough to have the important discussion surrounding money, you’ll have all the knowledge you need to make informed decisions surrounding your finances as a couple.  You can decide how to go about purchasing your first home, vehicles and household items and lessen any potential financial risks.  If you are over-indebted, or already undergoing debt review, be open and honest with your partner and discuss why it would be imperative to sign an antenuptial agreement. If you are already in debt review and then get married in community of property, this will affect your spouse negatively.

Lastly, should the financial burden become too much, do not be afraid to approach your partner with the prospect of undergoing the NCR debt review process. It could be constructed as a joint application even if you are not married, or a single application if you are married with an antenuptial agreement in place. Being married in community of property will mean that both parties must join the process though.

It is a wise and admirable decision that deserves support and it is the best way to regain control and bounce back to financial freedom.  With teamwork, spousal support and top debt counsellors like Sandton Debt Counselling at your back, you can look forward to successfully withdrawing from debt review, together!

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