July 2009

A credit provider needs to be aware of the marital status of all debtors who are personally liable for the debts incurred, i.e. consumers, partners, sole traders and members, directors or shareholders who have signed a personal guarantee for the debts of a close corporation or a company.

The “type” of marriage that a debtor has entered into will indicate which estate may be attached or sequestrated should the need arise.

The Act differentiates between the types of marriages namely:

• In community of property; or
• Out of community of property.

People married in community of property share one estate and therefore a creditor would have access to all the assets of the joint estate if a debt was owed and legal action taken.

It should also be noted if you are married in community of property the one partner will not be able to enter into a credit agreement without the written consent of the other.

However being married out of community of property may constitute one of two things:

• Being married out of community of property with accrual;
• Being married out of community of property without accrual.

Out of Community of Property with Accrual:

• Credit agreements may be entered into on own merit without the consent of the other party in the marriage contract as credit agreements entered into by one will not cause a direct liability for the other.

Out of Community of Property without Accrual:

• Credit agreements may be entered into without the consent of the other party as the other party will not become liable for payment of outstanding debt if the contracting party defaults on the account.

Case Study:

If a husband and wife are married out of community of property with accrual, is the one spouse required to give consent when the other is entering into a credit agreement since they are equal partners in what gets accrued?

The answer is no. The reason for this is that one spouse is never liable for the debt accrued during the marriage, she / he is only entitled to a share of the profits. The accrual system is also known as community of profit and only becomes relevant when the marriage is dissolved by death or divorce.

This is the reason why one party can enter into an agreement on his or her own because the other can never be held liable as their estates remain separate. Parties are therefore considered to be married out of community of property but in community of profit.

A scenario would be as follows:

John and Susan decide to marry out of community of property with the accrual system. John has an estate worth R20 000 at the time of marriage and Susan has an estate of R10 000. They get married and their estates remain separate. After 5 years of marriage they decide to get divorced. By this time, John's estate is worth R80 000 and Susan's estate is worth R50 000.

Therefore John's estate has increased by R60 000 and Susan's estate has increased by R40 000. The spouse's estate with the lowest accrual is subtracted from the spouse with the highest accrual. In other words, Susan's R40 000 is subtracted from John's R80 000. This leaves a remaining accrual amount of R40 000. This amount is then equally divided between the two parties.

What is important to remember is that Susan has no claim to this money during the course of the marriage. Therefore one of her creditors could have attached her estate but would not have been able to attach the accrued money or assets during the course of the marriage. Since the money came from John's estate, one of his creditors could have attached it at any time and whatever remained would be divided at the time of the divorce.

Traditional Marriages have been recognised according to South African Legislation according to the Recognition of Customary Marriages Act No. 120 of 1998.

According to the provisions of this act all traditional marriages entered into are subject to the traditional matrimonial system governing the marriage.

However, all Traditional Marriages entered into after 1 November 2000 will be deemed to be a marriage in community of property unless otherwise stated in the ante-nuptial contract.

Failure to clarify the decree of the marriage contract will automatically constitute a marriage in community of property with all the applicable contractual legislation attached to it.

It is noteworthy that in terms of the National Credit Act 34 of 2005 (which came into effect during June 2007), section 15 (2) of the Matrimonial Property Act has been amended by the substitution of paragraph (f) with the following paragraph:

“(f) enter, as a consumer, into a credit agreement to which the provisions of the National Credit Act, 2005 apply, as “consumer” and “credit agreement” are respectively defined in that Act, but this paragraph does not require the written consent of a spouse before incurring each successive charge under a credit facility, as defined in that Act”.

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