Divorce and Debt: Who is Responsible After Separation?

Money matters are one of the biggest worries for couples going through a divorce. While questions about who gets the house or car will often take centre stage, debt is just as important to understand. And if you are going through a separation, you may also be find yourself asking: who pays the debt after divorce?

The answer lies in how you were married. South African law recognises three main marital property systems, and each one treats debt differently. 

Married In Community of Property: Sharing Everything – Including the Debt

If you didn’t sign an antenuptial contract before your wedding, you are automatically married in community of property. This means that you and your spouse form a joint estate, which includes all assets and all debts acquired before and during the marriage.

In simple terms: you own everything together and you owe everything together.

• If your spouse took out a loan, you are equally responsible for it.
• Creditors can claim against the joint estate, even if you personally never benefited from the debt.
• Upon divorce, the estate is divided equally, which includes splitting the responsibility for debts.

There are a few exceptions: If your spouse incurred debt recklessly or without your consent (for example, gambling debts), a court may exclude that debt from the joint estate. This can, however, still be challenging to prove, as creditors are still due the debts owed to them.

Married Out of Community of Property Without Accrual: What’s Yours is Yours

If you and your spouse signed an antenuptial contract (ANC) excluding accrual, you are married out of community of property without accrual. Under this regime, each spouse has their own estate, both during the marriage and after divorce.

This means:

• Debts you incur belong only to you.
• Your spouse’s debts remain their sole responsibility.
• Creditors can’t pursue you for your partner’s loans or obligations.
  

Married Out of Community of Property With Accrual: Sharing Growth, Not Debt

The Matrimonial Property Act 88 of 1984 introduced the accrual system, which has become a popular choice for modern-day couples. Here, each spouse keeps a separate estate during the marriage, but at divorce, the accrual (the “growth”) of their estates is compared. The spouse whose estate grew less is entitled to half the difference between the two estates.

Debts play an important role in this calculation:

• Debts reduce the value of an estate.
• While you won’t be liable for your spouse’s personal debts, those debts lower the amount of growth in their estate.
• This, in turn, affects the final accrual claim.

For example, if your spouse built up a thriving business but also took out large loans, those debts are subtracted from the business’s value before accrual is calculated. In other words, you don’t inherit the debt, but it does influence how much you may claim during the divorce.

Practical Realities: Divorce Doesn’t Erase Debts

It’s important to remember that divorce doesn’t wipe the slate clean when it comes to creditors. If you’re jointly liable for a debt (as in community of property), your divorce agreement won’t stop a creditor from enforcing repayment against you.

This is why many divorce settlements include specific arrangements about who will pay which debts. And unless the creditor agrees to specific payment arrangements, you may still be pursued if your former spouse defaults on their debt payments.

Final Thoughts

Divorce is difficult enough without the added burden of unexpected financial stress. Understanding how debt is handled in South Africa can help you prepare and protect yourself. Because each situation is unique, it’s wise to seek professional advice. Contact Cawood Attorneys to speak to an experienced family law attorney. We can guide you through the process and make sure that debts, assets and future responsibilities are fairly and legally met.