Joint Bonds Where the consumer who applies

Joint Bonds Where the consumer who applies for Debt Counselling has a joint bond with another consumer the following is important:

a) If the bond is in the name of a couple married in COP the entire bond and joint income is automatically included in the debt review.

b) The bond has been taken out jointly by two consumers who are married ANC or not married it is often the case that both consumers are jointly and severely liable for the bond In many cases only one party to the joint bond applies for Debt Counselling and where the bond repayments falls in arrears, the Credit Provider could elect to enforce the agreement against the party who has not applied for Debt Counselling, despite the fact that the agreement is subject to Debt Counselling. Until there is case law on this issue or an agreement can be reached with Credit Providers on this issue, the following guidelines can be of assistance:

a) Debt Counsellors should inform the consumer of the legal position that both parties are jointly and severely liable for the bond and that Credit Providers may elect to enforce payment against the party not under debt review.

b) Consideration should be given to selling this property. Any profit should be divided proportionally and the portion due to the person applying for Debt Counselling should be used to reduce debt. In the case of a shortfall this should also be divided proportionally and the portion due by the consumer applying for Debt Counselling should be included in the debt review to be repaid in line with other debt.

c) Consideration should be given to explore the possibility of buying out the joint bond portion by the person not under debt review.

d) Consideration be given to substitution of debtor. The party not under debt review could “purchase” the other portion of the asset.

e) Where the house is included in the debt review, the Debt Counsellor could determine the percentage (or proportional share) payable by each party based on income declared when the application for the bond was processed, but the Debt Counsellor should inform the consumer that this process cannot guarantee that Credit Providers will not deem it fit to enforce the agreement against the person who does not apply for Debt Counselling. ______________________ ³ Short term insurance is normally a contractual obligation in the agreement entered into by the consumer and the Credit Provider to insure the asset against damage, theft or loss i. The consumer who is not applying for debt review should pay his or her contribution to the monthly payment directly to the Credit Provider or arrange for a debit order. ii. Insurance and maintenance cost should be shared on the same basis as set out above. iii. The value of the home loan included in the debt review should be proportionally to the commitment for monthly payment. For instance, if the consumer is liable for 50% of the monthly payment, that amount as per the COB should be included in the debt review. iv. Rates and taxes should be catered for on a proportional basis in the budgets of the consumers. v. Where the property which is subject to the joint bond is rented out, the full rental should be paid to the Credit Provider. Any shortfall should be divided proportionally as set out above. Any surplus should be divided proportionally, after deduction of maintenance cost, and should be income for the consumer who applies for Debt Counselling.