What happens when trying to settle a divorce matter and one or both of the parties is under debt review?
This no doubt effects the division of the assets quite a bit in a divorce matter, particularly where there is money owing to the bank on a mortgage bond or motor vehicle, for example.
Debt Review is basically a situation where somebody has various creditors and a considerable amount of debt to his or her name. In today's tough financial times more and more people are unable to pay creditors and are forced into a position where they must apply to be placed under debt review.
With debt review, the person who is under debt review usually has his whole salary paid into the person's account who is seeing to his or her affairs. That person then enters into agreements with the creditors of paying the debt off at a reduced price. The banks have to be more lenient nowadays when it comes to not being able to make a payment.
In one of my cases where I acted for the lady both parties had informally agreed that the wife would take over the husband's half share in the property, as well as the full mortgage bond. She would pay him out for his half share.
However, half way through the case, she was placed under debt review. She was furthermore advised by the bank that they wouldn't allow her to take over the full bond.
As a result of my client being placed under debt review me and the other attorney then had to change the terms of the agreement. It was then agreed that the house should be sold, and the proceeds or loss shared equally between the parties.
In this case there were also two cars. One of them was paid off. The other was driven by my client's husband, although the debt on that vehicle was on my client's name. Even though he wanted to keep the vehicle, this wasn't possible due to the debt review situation of my client. We agreed that the car is to be sold and the proceeds or loss shared equally between the parties.
Nobody wants to find themselves under debt review, as it affects divorce in so many ways. The secret is if possible, not to get into debt or buy on credit. This isn't always that easy as times are tough, and it is very difficult to purchase a house or car without credit these days.
Debt is one of the main reasons leading to the breakdown of a marriage. Strong financial positions often strengthen a marriage, while debt and weak financial positions play a major role in a marriage breaking down irretrievably.
Debt Review no doubt helps people in debt to pay their creditors. People often struggle to manage their financial affairs. The best solution is only to buy something when you have all the money for it.