Page 20 - PR Mag Aug19

$EXUALLY TRAN$MITTED DEBT

New relationships often carry the excitement and anticipation of some time after the original debts are paid off, the past asset
discovering what hopefully will be a rich mix of many common negative position of the debt ridden spouse may result in the
interests and values combined with admirable differences. other spouse (who was originally asset positive) being able to
However sometimes, along with all of the positives, comes the retain a much greater share of the present day asset pool.
shock discovery that the new man or woman is riddled with The bad news however is that if the couple were to separate
debt! Whether the new partner’s financial troubles are sourced before the asset negative spouse’s liabilities have been paid
from a one-off past misadventure or a healthy (and ongoing) off and the couple have subsequently acquired some other
appetite for overspending, resolution of the debt situation assets, the Family Law System prohibits the division of the
will obviously become a shared problem if the relationship is other assets in any way that might result in creditors being left
to continue. unpaid. Consequently, if one spouse puts $50,000.00 of his/her
For the partner who is asset positive, there is an understandable own cash into the purchase of a jointly owned home but the
trepidation, about how they might protect themselves for the other spouse still has a personal credit card debt of $20,000.00,
other partner’s liabilities, particularly if the relationship was to the Court might order the credit card to be paid off out of the
eventually breakdown and the couple choose to separate. $50,000.00, with the result that the debt riddled spouse leaves
Here there is a combination of good and bad news. the relationship debt free and the asset positive spouse leaves
The good news, is that the mere formation of a relationship $20,000.00 the poorer! Orders of this sort are not automatic
(even a formal marriage) does not automatically result in the and there are other ways to defend against the threat but it is
debts of one spouse becoming a joint liability between the definitely a risk to bear in mind for anyone taking on a partner
couple. Consequently even if the couple stay together, the with heavy liabilities in tow.
creditors of one spouse cannot pursue the other spouse’s assets * This assumes the asset positive partner has not subsequently refinanced
for repayment of the debts*. Also, if the couple do separate at the debt into joint names or given a personal guarantee for the debt.

Michael Zande is a Queensland Law Society Accredited Family Law Specialist with over 25 years’
experience in the field. He is the principal at Zande Law Solicitors, Suite 7, Norwinn Centre, 15
Discovery Drive, North Lakes. To contact Michael for advice, phone 3385 0999.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take
responsibility for any action readers take based on this information. When making decisions that could affect your
legal rights, please contact us for professional advice.

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