Debt Review and Its Impact on a Joint Bond

If you’re thinking about going for debt review and you have a joint bond or mortgage agreement, it’s important to know how this whole process will affect you and the other person on the bond. Whether you’re the one making the bond payments or sharing the load with someone else, debt review can have different consequences based on your situation.

Who’s the Main Payer of a Joint Bond, we also refer to the Main Payer as the “Primary Payer”?

Often, one person is the one making the monthly bond payment, even though both parties are legally responsible. To figure out who the main payer is, Debt Counsellors might check the payment history to see who’s been keeping up with the payments regularly.

• If you’re married in Community of Property (COP): You’ll need to submit a joint debt review application, so figuring out who’s the main payer doesn’t really matter.
• If you and the other bondholder are applying for debt review together: Same rule will apply—who’s the main payer isn’t important because the bond will be included in both of your applications. As a side note we do not encourage voluntary joint applications if you are not married in community of property as it becomes difficult to separate the debt review application IF one person has repaid all their debt.
• If you decide to apply for debt review separately from the other bondholder: The bond usually gets included in the debt review application of the main payer.
• If you’re not the debt review applicant but you’re the main payer: Your bond probably won’t be part of the debt review application if you can keep making full payments.
• If you’re the main payer and the one applying for debt review: The bond will be included in your application.

Legal Considerations and Financial Assessments

Debt Counsellors have to stick to Regulation 24(7) of the National Credit Act (NCA), which tells them to figure out if someone is over-indebted based on their financial situation, outlook, and obligations.

Key financial things to consider include:

• Your total income and what you owe.
• The income of any adults in your household who contributes financially.
• Your household expenses and how they’re split among everyone living there.
• If the other bondholder lives with you, their income and expenses should also be considered. They will not be placed under debt review, the Debt Counsellor purely needs to know whether they contribute financially to the household income and expenses.
• If the other bondholder doesn’t live with you and you aren’t married in COP, the NCA isn’t as clear on how to deal with shared financial responsibilities.

Why Full Financial Disclosure Matters

When you’re including a joint bond in debt review, you’ve got to lay out all the details of your financial situation. Since the Debt Counsellor can’t pull financial info from the non-debt review bondholder, it’s on you to share info about their contributions. This is really important for putting together a fair repayment plan for the credit provider.

The court has highlighted how crucial proper financial disclosure is in cases like Standard Bank of South Africa v Panayiotts. If you say you’re over-indebted, you need to back it up by showing all the details of your income, expenses, and financial obligations.

For Debt Counsellors and Consumers, see the full guideline from the NCR with examples for reference HERE

Steps to Take if You Have a Joint Bond and Are Considering Debt Review

1. Talk to the other bondholder: Let them know that you’re thinking about entering debt review and discuss how it could impact both of you.
2. Gather financial documents: Get together statements, proof of income, and expense details for yourself and, if needed, the other bondholder.
3. Consult a registered Debt Counsellor: They’ll assess your financial situation and steer you in the right direction for your joint bond.
4. Submit a clear repayment plan: If your bond is part of your debt review, your proposal should explain how repayments will be made and any contributions from the other bondholder.
5. Keep communication open: Make sure you and the other bondholder stay in touch throughout the debt review process to keep everything in line with the restructuring plan.

Final Thoughts

Having a joint bond in debt review can be a bit tricky, but understanding your legal and financial obligations will help you get through the process smoothly. Whether you apply together or separately, the key things to focus on are being open, planning your finances well, and getting professional help from a qualified and registered Debt Counsellor, DCASA has a list of Debt Counsellors that are also members of an association here: https://www.dcasa.co.za/debt-counsellor-near-me/ 

– Vanessa Johst (Operations Manager – DCASA)