Separation and divorce are usually stressful and challenging experiences. As well as navigating emotions and adjusting to change, several legal matters need to be considered, such as the custody of children and how assets and liabilities will be divided between the parties.

As individuals we accrue both assets and debts in our lifetime. When we partner with someone else, we can also accrue joint assets and liabilities. Having a Binding Financial Agreement in place with your partner can help you understand your partner’s assets and liabilities. This is important to consider, because you may be held liable for your partner’s debt during a separation even if you did not incur it.

Most couples will take out a mortgage to buy a house and know that in the event of separation, the mortgage needs to be paid off prior to the division of assets. What is less known, is that other debts such as student loans, car loans and credit card debt, that are not jointly held can also be allocated between the parties.

Your partner may have an existing student loan or car loan that they have had even before they met you. Your partner may have had a gambling habit they kept hidden from you. During divorce proceedings, the Court will look to see whether you have benefited from the debt incurred by your partner. If you have not benefited, then you may not be held liable for that debt. If you have benefited, then you may be held responsible for a proportion of that debt, even if you did not incur it yourself.

If you are currently navigating through a separation or divorce and concerned about your individual and joint debt, talk to our trusted Family Law team. They are experienced and practised in helping our clients achieve the best outcome during such challenging times.

Author: Anna Pitchouguina.

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