How are debts incurred after separation dealt with by the Family Court?

When dealing with separation after a relationship has breakdown, often the priority is usually the division of the assets which include the house, car, shares, savings, superannuation, and other types of assets. What should not be neglected is the equally important division of the debts and liabilities.

People often hold a view that debts incurred after separation should be excluded when calculating the division of property. This is not the case.

Post Separation Debts

A family law property settlement includes all assets and debts. Debts are deducted from the total assets as at the date of the final orders. The asset pool is not calculated at the date of separation but at the date of when parties get final court orders, consent orders or enter into a binding financial agreement. The relevant value of the net assets of each party is at the date of settlement, or trial. This means that superannuation, savings, inheritances, employment payouts, compensation, lottery winnings and other assets including motor vehicles and furniture accumulated after separation do form part of the net assets available for division.

In short, debts after separation are included in the property pool unless if the debt is considered to be unreasonable, illegitimately incurred or not a debt at all. When a party takes on an unreasonable debt it is known as dissipating the asset pool.

Dissipation of Assets

In most contexts, asset dissipation refers to intentionally using up or wasting assets. In this case, we are specifically referring to the dissipation of matrimonial assets. Dissipating assets in family law is misusing, lavishing, or squandering the asset pool with or without an intention to make sure the other spouse does not get it. It is called wastage.

If the innocent party can prove that the guilty party’s conduct amounted to waste, the Court may take this relevant property into account and make an adjustment, in percentage terms, to the entitlements of the parties to the assets to be allocated at property settlement in favour of the innocent party. Ultimately, the assessment of the circumstances is a matter of the court’s discretion.

Here at Straits Lawyers, we can work with you to make sure that you receive a fair property settlement.

If you would like to find out more about property settlements or your rights and options, Straits Lawyers are here to help. Simply send us an email at info@straitslawyers.com or give us a call on 8410 9069 to arrange an appointment for an online interview.

Alternatively, if you would like to have a Binding Financial Agreement or Consent Orders drafted, Straits Lawyers are now offering online services at https://straits-lawyers.square.site/product/family-law-binding-financial-agreement-consultation-bfa-/5?cs=true.

Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.