MONEY CLINIC | How do I get out of joint debt review after a divorce?

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A Fin24 reader who has got divorced since entering into debt review seeks the help of an expert on how to clear her name and move forward.

She writes: 

My husband and I went into debt counselling in 2009. Our case was transferred to at least three different counsellors. We got divorced in 2018.

We were married in community of property. He has been unemployed for the last six years and has no steady income. Therefore, it is unlikely that he will pay off his debt.  

I have no judgments against my name, and all my accounts are up to date; however, my name is still on the database. How can I clear my name? I have been hindered from getting any credit and moving forward.

Debt counsellor Renèe Marais responds:

Debt review is based on the commercial status of consumers, consumers who are married in community of property are one legal entity (joint natural persona) and when they get divorced, they are then two separate natural persons. 

This a legal process that has to be followed and that is done by a lawyer.  

A debt counsellor may be consulted to assist in the drafting of the two new debt review orders or if one of the parties has paid up all the debt to issue a separate clearance certificate for the one party who doesn’t require debt review anymore.  

Only a debt counsellor can issue a clearance certificate, no one else. The other party who might still be over indebted will then have to pay off his or her debt until the time comes for a clearance certificate.

  • The divorce settlement must also remedy the debt review order. This is a High Court application; debt review matters are Magistrate Court orders. In the court application should thus remedy the debt situation of both parties going forward. If there is a National Consumer Tribunal order, that has the same status as the High Court and that needs to be rescinded either before or after the divorce depending on legal advice.
  • A debt counsellor cannot withdraw a debt review court order after it was granted. If there is no debt review application pending before the Magistrate Court then the consumers are not in debt review yet and the consumers situation is remedied with the divorce settlement.
    • If the consumer thereafter still requires debt review, then the persons can apply again.
    • If there is a debt review application pending then can only be withdrawn with a copy of the divorce settlement agreement.
    • Or it can be rejected by the Magistrate if the consumers are no longer over indebted.
    • Again – if there is a debt review order, the matter needs to be rectified by the divorce lawyer in the High Court.
  • The NCR Debt Help System (DHS) is a non-statutory register not prescribed in law and used as a tool in the industry but that cannot be used to fix a consumers legal standing and commercial rights or juristic status

To assist this consumer the first thing to establish is whether there is a debt review order, if there isn’t one it is easy to assist her. If there is a debt review order, the matter needs to be rectified in the High Court if the order was given by the Magistrate's Court and there is a material defect or if it was in the National Consumer Tribunal the matter has to go to the High Court too to have it rectified – based on the settlement agreement in the divorce.  This will be done by a lawyer.

Updating the DHS register will not assist this consumer legally and referring this matter to the Credit Ombud will serve no purpose as a debt review order is a legal instrument that needs to be rectified via a legal process.

I am not a lawyer and this is not legal advice. For legal advice please contact a lawyer or attorney.

Kabelo Teme, Communications Liaison at the Office of the Credit Ombud, also responded: 

Depending on the divorce decree, this would determine if the one or both spouses remain liable for debts taken during the marriage. There are implications for the spouses due to them having been under debt review. They would need to liaise with their debt counsellor to check the debt review status as they are no longer married. It may be that their debt counsellor will have to apply at court for the debt review to be withdrawn and for both spouses to start the debt review process afresh on their own. 

For the spouses to apply for debt review independently, they would need to be employed, so the debt review may not work for the unemployed spouse. From the consumer’s query, she indicates that she has paid up the accounts, so she would need to request the debt counsellor to update the debt help system at the NCR (she must provide proof that the debt help system records show that the status had been updated), furnish her with a clearance certificate and obtain paid-up letters from the credit/service providers.

Once the consumer has obtained her clearance certificate, paid-up letters and proof that the debt help system has been updated, she may contact the major credit bureaux to lodge her dispute if her credit reports have still not been updated and follow the regulated credit information complaints process, which is:The Credit Ombud may proceed to investigate a complaint against a subscribing member upon confirmation of the either of the following, i.e. the:

1. 20 business days that the credit bureaux have to investigate the matter have expired and the matter remains unresolved and/or you remain dissatisfied with the outcome; or 2. credit bureaux have reverted to you prior to the 20 business days with written feedback that they have credible information, thus they cannot amend the information on your profile.

Questions may be edited for brevity and clarity.

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