A lot is said about how unhealthy relationships affect emotional and mental well-being, but rarely about how the wrong relationship decisions can damage financial health.
Financial stress in relationships, often caused by well-intentioned but poorly understood financial decisions made in the name of love, can quietly undermine both partners’ financial security, long before the warning signs are recognised.
This February, the National Debt Counselling Association (NDCA) is urging consumers to look beyond romantic gestures and consider the long-term financial implications of relationship choices — and how the wrong ones can lead couples into serious debt trouble
“People don’t always realise how undisclosed debt, credit obtained on behalf of others, or credit taken out during a previous relationship can cause tension between even the most lovestruck couples,” says NDCA chairperson, René Moonsamy.
She says the first thing to understand is that the legal liability for repaying borrowed money lies with the person whose name is on the credit agreement. This means that if you apply for credit on behalf of a loved one, you remain responsible, even if the other person has agreed to make the repayments.
“Credit follows the contract, not the relationship, and emotional agreements between parties have no legal standing. If you take out credit on behalf of someone you love and they miss repayments, it will negatively affect your credit record. This may limit your access to further credit, or result in you having to pay higher interest rates because you are deemed to be higher risk.”
A second consideration is that old debt and new relationships can be a toxic combination. This occurs when debt incurred in a previous relationship follows someone into a new one. It can strain the relationship, particularly if the person who owes the money attempts to hide it and their partner finds out.
An example of how this can happen is where credit is granted based on a combined household income. If the relationship ends and one of the partners stops paying their share, the primary debtor is left carrying the full expense burden, financial strain and risk of over-indebtedness into any subsequent relationship.
Another misconception is that divorce decrees remove liability. While divorce orders may allocate responsibility between spouses, they do not bind credit providers. Where there is joint debt, both parties may remain liable, even after the relationship has legally ended.
It is also essential to understand the marriage regime applicable in South African law, as this decides how assets and debt are treated in the event of a divorce.
If you have not signed an ante-nuptial contract (ANC) in front of an attorney before getting married, then you are married in community of property. This means you and your spouse share assets and liabilities. If one partner is struggling with debt, both are affected.
An ANC agreement means you are married out of community of property, and your assets and liabilities are kept separate. There are two types of ANC agreements – with and without accrual.
Accrual ensures separate ownership of assets and liabilities during the marriage, while allowing for shared growth in the value of the estates. If there is no accrual, assets and liabilities are kept completely separate, and there is no shared growth in asset value.
The NDCA’s suggestions:
- Honest, upfront conversations prevent long-term damage.
- Understand each other’s financial priorities to avoid conflict later.
- Work towards common financial goals to strengthen your relationship.
- Agree on spending limits.
- Get help if you feel you need it.
- If you’re planning to get married, understand the implications of being married in or out of community of property and the distinction between the two kinds of ante-nuptial contract.