A Fin24 user may lose his wife due to a botched debt review process. He writes:
I am in debt. My wife is 100% not in debt and I decided to apply for debt review, only to be told my wife must be included as well because we were married in community of property.
The problem is I thought they were going to consolidate all our instalments, but that’s not the case.
So now my wife is very, very angry with me and she even wants to lodge a divorce. Can you please help?
Friedl Kreuser of Summit Financial Partners responds:
First off, the Fin24 user should note the difference between debt consolidation and debt counselling.
Debt counselling is a legal process to help over-indebted consumers repay their debt, while debt consolidation is a loan that is intended to replace multiple small debts with one big debt (but doesn't really reduce debt in many cases).
In terms of debt counselling, if the user and his wife are married in community of property, the law sees their estate (their assets and debts) as one single joint estate.
For this reason, one spouse cannot apply for debt counselling without the other, as both parties are liable for the debt.
Until his wife signs the debt counselling application form, however, they haven't validly applied for debt counselling - she cannot be included by default.
If she has already signed but wants to back out, both of them will have to withdraw from debt counselling. It's obviously better to talk it through before signing anything.
Consumers applying for debt counselling often take a stance of "his" debt and "her" debt, but the fact is, if they are married in community of property there is no such thing - it is simply "our" debt.
The parties are not only marrying each other, but their finances as well.
That is why it is vital for couples contemplating marriage to discuss their finances openly, honestly and at length to make sure they know what they are getting into, and to make sure they understand the various matrimonial property systems available.
Community of property is the default matrimonial property system; to keep estates separate (which we recommend for numerous practical reasons), both parties must sign an antenuptial contract before getting married.
Antenuptial contracts have a bad reputation as people associate them with planning to divorce, but they offer a way to protect your spouse and help manage your finances more responsibly together - which is vital in keeping a marriage together.
As for the Fin24 user, financial strain can be a serious - and sometimes fatal - speed bump in an otherwise stable marriage, but many others have managed to overcome it.
I recommend that he and his wife see a marriage counsellor to work through the issue, and then come up with a strategy on how they are going to beat their debt together.
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