South Africa's new credit penalties for maintenance defaulters explained

Parents who fail to keep up with maintenance payments may soon face a new hurdle: restricted access to credit. The Department of Justice has introduced a policy that could see delinquent parents’ credit scores take a hit, as South Africa grapples with a staggering 70% default rate on maintenance payments within two years of court orders. Ayanda Ndimande, head of business development at Sanlam Credit Solutions, warns that the new enforcement measures could have serious financial repercussions. “While we’re still waiting for details on how the new policy will be enforced, it’s clear that failing to pay maintenance on time could lead to denied credit or lowering one’s credit score,” she said. “If you are divorced or separated and responsible for paying maintenance, it’s worth partnering with an adviser to review your financial planning in the context of your holistic financial responsibilities". The policy stems from a Memorandum of Understanding (MOU) signed by the Department of Justice, the Consumer Profile Bureau, and the Social Justice Foundation. This agreement allows credit bureaus to access data on late maintenance payers, potentially blocking their ability to secure loans or other forms of credit. The move mirrors global efforts to enforce parental accountability through financial penalties. Sankie Morata CFP, chief executive of Sanlam Trust, highlighted an additional layer to the policy: its reach extends beyond the living. “If defaulting parents pass away before fulfilling their court-ordered financial obligations to their children, the children or their guardians can sue the parent’s estate for the outstanding amount,” Morata explained. This claim would be legally binding against the deceased estate. For divorcees, the stakes are high as they navigate these changes. Ndimande emphasised the importance of proactive financial planning amid the upheaval of separation. “Divorce can be a major ‘life disruptor’ causing considerable financial change,” she noted. “Work with a trusted financial adviser to review your budget and prioritise your responsibilities to children and other major commitments". She also offered practical advice for those bracing for the credit shift: “It’s well worth downloading your credit report for an overview of all credit activity. This gives you a starting point to spot debit orders or store accounts you no longer need and ensure all your information is correct. If you’re considering taking on more credit, work with an adviser or a credit coach to see how much this will stretch you. Can you still comfortably afford monthly maintenance obligations when factoring in loan repayments? Work out what you can realistically afford and avoid taking on more debt if it could leave you financially stressed. You don’t want to compromise your credit score, creditworthiness, and future credit applications. With credit, payment consistency is always key". Support is available for those feeling overwhelmed. “Our credit coaches are always on hand to offer free support to help people build their credit confidence by understanding their options and affordability," Ndimande added. “Divorce and separation can feel lonely and daunting. It can be reassuring to work with a professional to know your options and ensure your major financial commitments – like maintenance – are met".

PERSONAL FINANCE