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Breaking up is hard to do...Especially with debt: A guide to untangling financial ties

Breaking up is more than dividing assets: navigating debts during separation

If you have recently separated from your ex-partner, you might be asking yourself what assets you are entitled to. However, assets are only half of the picture. It is important to consider which debts you are likely to be liable for post-separation. The way in which your assets and liabilities are divided between you and your ex-partner will largely depend on your individual circumstances as no two relationship separations are the same. The team at CPC understand a divorce can be a challenging time for all parties involved. In order to avoid further stress and emotion, determining your financial position should be a priority in the early stages of your separation.

What you own and what you owe

Often in post-separation settlements, parties are focused on the division of assets. However, like assets, debts accrued during the couple’s relationship must also be divided. The first step is to identify your property pool, including what you and your ex-partner own (assets) and what you owe (debts).

Examples of what you own:

× Matrimonial home;

× Investment properties;

× Bank accounts;

× Family trusts;

× Superannuation; and

× Vehicles.

Examples of what you owe:

× Personal loans;

× Mortgage debt;

× Credit card debt;

× Household bills; and

× Tax debt.

Can my debt affect my entitlements?

Under Family Law legislation in Australia, the culminative total of debt between you and your ex-partner will be deducted from the value of your asset pool. This includes both debts held jointly and individually. In determining a fair division of property, financial and non-financial contributions of each party, as well as future needs are considered may be considered at the court’s discretion.

Spending habits /excluded from a settlement?

Can my ex-partner’s expenditure affect the overall division of our property post-separation? The short answer is no — everyday spending habits of your partner, such as on social outings, clothing, and food are unlikely to be excluded. However, debts can be excluded from a property settlement if deemed unreasonably, illegitimately, or negligently incurred. Common circumstances include debts incurred from gambling, or deliberate ‘wasting’ of assets. It is important to realise that wastage can occur after separation, but before property settlement. If accepted, a debt may be wholly excluded from the property settlement, however this is a complicated process which is dependent on the circumstances between you and your ex-partner.

In summing up

Whether you were married or in a de-facto relationship, property settlement post-separation is often a confusing process which may leave you wondering what you actually own and what you owe. Debts owed can have a significant impact on the division of assets you receive in property settlement. Hence, it is important to seek assistance on your financial position and understand expenditure which might be deemed unreasonable.

Want to know more?

At CPC Lawyers, we understand that navigating a separation can be a challenging and emotional time. That's why our experienced solicitors are here to offer professional and supportive advice regarding your assets and debts in post-separation property settlements. We're dedicated to helping you achieve a cost-effective outcome while providing transparent costings and unbiased guidance. Don't face the financial complexities of your split alone. Contact us today to gain clarity and peace of mind during this difficult time.

Contact us: Book A Consult here Call: (08) 7325 0219 E-mail:


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