Lending money to a spouse is complicated. Here’s how to do it right

Joy Wangui works as a health records officer at a county hospital in the lower eastern region. She earns a net salary of Sh28,000. Over the last one and a half years, she has hardly enjoyed the fruits of her labour. Nearly all her salary has been going to a bank loan she took for her estranged husband. 

“I took a Sh800,000 loan to help him buy a secondhand matatu. The repayment period is 48 months. Every month, I’m deducted Sh21,661 and only take home Sh6,339,” Joy says. 

When she applied for the loan, the mother of three was convinced that it was in the best interest of her family. “My husband was working as a matatu driver and it looked reasonable for him to be his own employer,” she says.

“He did the math and showed me that we would be making a minimum of Sh4,000 daily for a single return trip from Kitui to Kibwezi. I was sold.” The couple agreed that since the loan repayments would be deducted from her salary, her husband would be depositing an equal amount in her bank account on the due date. In the early months of the repayment, he made the deposits faithfully. 

“There were times he would say he doesn’t have money but he never went a week past the due date. Signs of trouble started to show in the fourth month when he delayed for three weeks.

 “In the fifth month, he deposited half the amount and lamented that business was bad and in the sixth month, he stopped making the deposits altogether,” laments Joy.

Whenever she asked him why he wasn’t making deposits as they had agreed, her husband would burst into a fit of rage. 

“Some days he would come home drunk and start beating me up accusing me of soiling his name,” she says.

 He accused her of spreading news that he had bought the vehicle for him! “He would blurt out statements like, ‘Unataka kuonyesha watu sina akili ni wewe umeniweka?’ to justify the violence,” she says. 

Joy could tell that her husband was making money from his change of lifestyle. 

“He started dressing flashily. He even got a new, bigger smartphone that he couldn’t have afforded previously,” Joy says. 

Her husband would either come home late at night or not at all. In July, he stopped coming home. “I heard that he was staying with a new woman. I confronted him and he bluntly told me off. ‘Si ulisambaza habari eti ni wewe umeniweka? Sasa jiweke juu sitakaa na mwanamke kichwa ngumu!’” she says, tears welling up in her eyes.

She regrets taking the loan. “I wish I knew!” she mutters multiple times. 

Joy adds: “We don’t have a marriage certificate; will the court believe me if I sue? What if I report him and he harms me?” she asks.

In the meantime, Joy is putting on a brave face. “I am barely surviving. I have had to move houses and started selling mitumba over the weekends to keep up with rent and groceries,” says the mother of a four-year-old boy.

Money is the soft underbelly in most marriages. It is the biggest violator of trust in marriages especially when it comes to lending soft loans or taking bank loans on behalf of a spouse. Unfortunately, the majority of spouses realize this when it is already too late. 

Defaults after lending

As the Saturday Magazine found out, many married women have had to contend with losses after lending to their partners or taking loans for them. 

This trend is not about to end. The number of defaults is rising in banks pushing people to unofficial lending sources which include spouses. Data from the Central Bank of Kenya (CBK) shows that defaulted loans rose by Sh30.6 billion in June 2022 to Sh514.4 billion. This was the biggest jump in Kenya’s recent history. The share of non-performing loans hit a new high of 14.7 percent in June 2022. This was a higher ratio than the 14.55 percent recorded in March 2021 when Kenya was battling Covid-19 economic hardships.

Borrowing and lending to a spouse make perfect sense as it saves the hustle and charges of going the traditional bank loans way. But there is a major loophole. Amidst the kindhearted gestures of lending to spouses, some women have lost both money and the properties they toiled hard to acquire after their husbands used them as loan security on bad debts and then defaulted.

Christabel Ayub might soon become one of these women if she doesn’t find a solution to her predicament soon. She says that she is on the verge of losing her matrimonial home after her husband used it to secure a bank loan to purchase a Mitsubishi Fuso Tipper. 

“In 2019, my husband got caught up in the craze for tipper trucks. Two of his friends had taken loans and bought Tata Tippers. They convinced him it was a good business. I objected because we didn’t have money to finance the purchase or repay the Sh8.2 million loan for the truck,” says Christabel who is a high school deputy principal. 

Her husband was jobless, but as the head of the family, he made up his mind. He went behind her back and secured a micro-finance loan for the truck using their ¾ acre land where they had constructed their home. 

Christabel, who is 48, recalls the conflict of emotions that struck her when the truck rolled into their gate. “I didn’t know how he had managed to secure financing. I wanted to be happy for him but I knew it was a terrible idea,” she says.  

She would later get very angry when she realised the cost at which the truck had been secured and the risk her family had been exposed to. 

“Apart from giving out the title, the loan wasn’t on a reducing balance. The market was saturated with similar tippers and there was no way he would make the Sh208,226 monthly payments for 60 months,” she says.

Four months later, Kenya went into a lockdown over Covid-19. Business went from bad to worse. Her husband was struggling with repayments and applied for a loan restructuring. “They gave him a grace period but secretly kept piling the penalties and charges for the six months he didn’t make penalties in 2020,” says Christabel. 

When payments resumed, the truck became the source of their fights. “We were being slapped with heavy penalties whenever he failed to make a payment. We had kids in secondary school, and I was handling the household budget,” she says. 

Nearly two-thirds of the money they had repaid at the time went into settling penalties, insurance, and charges. To top it all, their tipper was becoming a regular garage visitor due to poor maintenance.

 “I told him to sell the tipper and find ways to clear the balance but he said I was henpecking him. Our fights got very bad. We stopped sharing the bed. He became an alcoholic, and in March he stopped coming home,” she says. 

Christabel biggest concern is that her husband has defaulted on the loan and now the micro-finance is after her home. 

“Last month I received a letter of notification that they want to auction off my home,” she says. 

“I contributed the biggest chunk in buying this land and constructing this home and now I am about to lose it all over a loan I didn’t apply for,” Christabel mourns.

Her pay slip cannot also keep up with the payments. “Everything I was afraid of when I told him not to take the loan has come true. I am about to lose everything I have worked for all my career life,” she says, bitterly.

Christabel though might have options. A Court of Appeal landmark ruling in favour of Elizabeth Wanjiru – popularly known as ‘Shosh’ in the Mother-In-Law local TV programme – shows that the move by the micro-finance to auction Christabel’s property over the loan her husband took might not be entirely legal. 

Property law case study

According to this ruling, a spouse cannot use matrimonial property to secure a loan without the consent of his or her partner. This case involved Wanjiru’s former husband Shem Bageine, Housing Finance, and a third-party buyer, Mugo Muriu Investments Ltd. The Court of Appeal ruled that Housing Finance had failed to verify whether Bageine had sought his wife’s permission to take up the loan. Court documents showed that Wanjiru and her husband had acquired the home in 1981 through a mortgage that was given by Housing Finance. The home was registered under the husband’s name. Wanjiru contributed in buying the property. The two repaid the mortgage in full in 1984.

When the two separated after repaying the mortgage, Wanjiru’s husband took a Sh600,000 from Housing Finance and used their home title deed as security. He then failed to repay the loan. The house was transferred to its new owner Mugo Muriu on June 10, 1988 who started demanding rent from Wanjiru. She sued Housing Finance and her husband for taking the loan with a property she was part of without informing her. 

After 29 years of contestation, the Court of Appeal ruled that the interest of a spouse to a property acquired jointly cannot be overridden by that of a lender to recover an unpaid loan. 

“Anyone who lends money on the security of a matrimonial home nowadays ought to realise that the wife may have a share in it. It seems utterly wrong that a lender should turn a blind eye to the wife’s interest or the possibility of it and afterward seek to turn her and the family out on the pleas that he did not know she was in actual occupation,” the Court of Appeal ruled.

Can’t pay, won’t pay

A lot of times, spouses claim that what belongs to one also belongs to the couple. Such is Victor Gitonga’s belief. 

“I would pay if my wife paid me back for taking care of her and putting a roof over her head,” he says. 

He admitted that multiple times he has borrowed soft loans from his wife who works as a primary school teacher without any intention of ever repaying. “We have argued over my non-repayments, but I always put my foot down. I am the man of the house. I am the family’s financial overseer,” Victor affirms. 

According to psychologist Ken Munyua, the refusal to pay is disregard for a partner’s need for financial freedom and can spark other marital problems. “This might result in a wife withholding conjugal rights, which triggers a host of other issues. Intimacy problems plus financial problems are a very toxic mix,” he warns.

He also advises couples to approach issues of money lending like a lender would. “When you want to borrow money from the bank, you will be required to state the reason why you want the money and justify how you will repay it. Establish whether your partner has a valid and urgent need that requires a loan,” the psychologist says.

 “Does he need a soft loan to gamble, take a vacation or even invest in projects that will never break even?” says Munyua. 

If you don’t feel comfortable with his reasons, do not hesitate to turn him down. 

Munyua adds that before you get to the lending part, the marriage should have a sense of financial individuality. 

“Every spouse must first appreciate that whereas it is ‘their’ money, each person has the right to direct how their share of finances will be utilised,” he says. This also means that each spouse should understand that whereas the other might have more money, they might also have other priorities.

Munyua says that you should also ask what’s in it for you. 

“The bank gets interest, what will you get if you act as the lender?” he says. 

According to marketing consultant Jacqueline Curtis, chances are that your partner may already be deep in debt and cannot qualify for a bank, Sacco, or Chama loan. 

“Make it clear that if you are going to consider lending them money, you will require full financial disclosure,” she says. This includes a bank statement,” says Munyua. 

If you decide to lend your partner some money, bear in mind that your partner may very well default on repayments. “Even the most well-meaning person might fall on bad times and default. Ask yourself whether you’re okay with that,” advises Curtis.

Some women have devised new ways of shielding themselves from defaults by taking stakes in their husband’s ventures. Joselyn Kabugo says that she has no problem lending her man cash because of the way they have structured their finances. 

“I get shares in his business so that if he succeeds, I also do the same. If he wants to repay, he can buy me out,” she says. For this to work, the couple has agreed that they will not borrow pocket change from each other. 

“When he wants funding, I know it is not Sh1,000 or Sh20,000. It is an amount that might require me to get a quick bank loan or offload one of my investments if I don’t want to labour with a bank loan,” she says. 

“I strongly feel that there should be financial systems for supporting each other to prevent couples from acting like Shylocks.” 

There is a catch to the efficiency of this system. “It would probably not work if I had the money and he didn’t,” says Joselyn. She is a senior bank manager and her husband is an engineer in private business and an immediate former County Executive Committee (CEC) member.

A man who is at par with you financially is more likely to be clear on what he wants the money for and the return on investment which you can tap into. 

“He won’t take a Sh5 million loan to try potato farming, but he may borrow to fund a tender because he knows how to push for payment and the profits,” she says.

The legal side

According Sheila Sabaya, an Advocate of the High Court who specialises in family law, it is almost impossible for an aggrieved wife to make a claim that her husband has defaulted on money she gave him. 

“If the couple is legally married, the man and wife are considered as one. The law views that the right hand cannot, therefore, steal from the left,” she says. 

For instance, if you take a bank loan under your name to fund your husband and he misuses the money, you cannot force him to repay because you understood the risk. 

However, if the woman took a loan and gave the husband the money for investment, and she can show where the money was invested (for example property) she can make a legal claim if the marriage is dissolved. “This will be done as a claim to the matrimonial property for which she contributed,” says Sheila.

Where the couple is not legally married, Stefanie O’Connell, a financial advisor and author of Broke and Beautiful, says that you may consider a promissory note – which in the worst-case scenario can be legally enforceable. However, Sabaya cautions that this may not work within the marriage context as a court of law may prohibit you from testifying against your husband when still legally married. 

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