The office of the Credit Ombud has seen many consumers complaining that they are blacklisted for debt they did not take up. Other times, consumers simply demand that accounts (payment profile) reflecting on their credit profiles be removed as these accounts affect their affordability when applying for credit.
Temel Ritief* recently wrote to the Credit Ombud lodging a complaint pertaining to a home loan.
The lender has included my husband’s home loan on my credit profile even though the bond is in his name. I have queried this with them. They say because we are married in community of property the home loan is my debt as well. The problem is he earns 5 times more than I do. I am unable to get any form of credit because my debt utilization compared to my income is over 80 percent due to the listing .What I earn is not enough to sustain a bond this size .Surely if this is the new ruling with regards to home loans then I should have his salary reflected as income on my side as well .I have tried talking to the lender without avail .We have had our home loan with them for 15 years and this listing has been added on my credit profile now over the last year .I have spoken to one credit bureau who are the only people including this in my profile .They have redirected me back to the lender. The bond is not in my name and if we are married in community of property then what is his is mine and that should include his salary as well and vice versa.
Some consumers believe the debt they take out in marriage and the reporting of the debt to credit bureaus would affect the one and not the other – especially if the debt was applied for by the one party or they are the one responsible for the payment. This opinion is mainly due to lack of knowledge on contracts, how credit bureaus work and how information is passed on to the bureaus. This is according the Credit Ombud, Mr Nicky Lala Mohan.
It makes sense for consumers to think this way as many of them would look at individual income and decide based on who earns how much, what debt is being taken out and by whom. “The reality of the matter is that couples married in community of property are liable for each other’s debt. What’s mine is yours and what’s yours is mine – including debt,” adds Mr Lala Mohan.
Temel’s main concerns were:
- Her husband is responsible for the payment of the bond
- Based on her salary she would not qualify for a bond of that amount
- The bond is listed on her credit profile, which affects her affordability when applying for credit
- The full bond amount is listed and not half
When applying for credit while married in community of property, particularly when it comes to home loans, parties are jointly and severally liable for the debt. This means that two or more persons are fully responsible equally for the debt. It also means that a creditor may pursue a debt obligation against any one of the parties as if they were jointly liable and it becomes the responsibility of the debtors to sort out their respective proportions of liability and payment. In other words, the debtor may collect the entire debt from any one of the parties, or from all the parties in various amounts until the debt is paid in full. If any of the parties do not have enough money or assets to pay an equal share of the debt, the other parties must make up the difference.
Joint accounts (home loans for example) do not just apply to married couples. Unmarried individuals can apply jointly. The advantage of joint accounts/loans is being able to qualify for what you would not necessarily qualify for with your income alone.
The disadvantage on the other hand is that should both or one of you default, both are liable and both your credit records are affected.
What is important to note is how this information is recorded in the credit bureaus and what happens when the debt goes into default.
While the joint account is still active, the following information pertaining to the account details are recorded on both parties’ credit records (payment profile):
- Type of account – the type of account, be it home loan, revolving credit account, credit card account, etc.
- Ownership type – this indicates whether this is a joint loan or other
- Number of joint loan participants – this indicates how many parties are responsible/liable for the debt
- Opening balance – the total amount provided at the time the account was opened
- Current balance – the current amount owing on the debt
- Terms – this is the number of instalments
- Installment amount – the minimum amount due
- Repayment frequency – this indicates whether the debt is to be paid monthly, quarterly, etc
- Months in arrears – if the debtor has missed payments or is behind with payments
- Overdue balance – when the account is up to date, the overdue balance will sit on R0, however, if there are missed payments and the account is behind it would reflect the amount overdue.
This information is reflected for the duration of the account until paid up or the debt goes into default and results in a negative listing loaded on the credit profile.
Should the account go into default and negative information be passed, be it default or judgment, the negative information will reflect on all parties responsible/liable for the debt.
Although Temel Ritief’s desired outcome was that the account details of the joint loan be removed from her credit profile since her husband was responsible for the payment, the reality is that this information will reflect on her credit profile until fully paid and closed.
*not the consumer’s real name
Consumers can contact the office of the Credit Ombud for FREE assistance if they experience any issues relating to credit agreements with non-bank credit providers such as the clothing and furniture retailers as well as micro-lenders, fraudulent listings, emolument attachment orders (“garnishee orders”) or general complaints about their credit bureaux listings. The office can be contacted on 0861 66 28 37; on the website www.creditombud.org.za; email us at firstname.lastname@example.org or send a sms to 44786 and we will call you.
If you would like more information about this topic, please contact Salem Dyafta , Public Relations Manager at 0792243802 or email at email@example.com.