In conversation with The Australian, Gillian Coote explains how debt is dealt with in divorce.
It's not unusual for people to carry mortgages and other debts into retirement, and the growing trend of grey divorce - with one in three divorcing couples today aged over 50 - sees plenty getting sucked into debt traps.
Finance and legal specialists say professional advice is crucial when dealing with debt and divorce, because a do-it-yourself approach could dig a huge financial hole darker than a bad marriage.
Home Truths
Founder and Managing Partner, Gillian Coote, told The Australian that high interest rates have been a problem for divorcing couples.
"It's very difficult if you are living in a situation where you are only just meeting the mortgage payments, and then you split up and have to cover the cost of two households" says Gillian.
"But the basic principle and first step in a property settlement is to work out what's there in total".
This applies to all assets and debts in a dissolving marriage.
"It doesn't matter whether it's held in either or both names, or whether in a company or a trust" says Gillian. "The asset and the liability go into an asset pool and we end up with a net figure".
"All debts are considered across the board - including credit card debt, personal loans, hire purchase, car leases. They all go in and it all comes off the top line and then we divide it".
Once the debt is divided, often assets must be sold to pay it off.
"The principle of the Family Law Act is to make sure there is a clean break between couples, and that means getting rid of debt in one person's name" Gillian said.
"So you have to refinance, and if you think you can take on a mortgage to pay the other one out, you have to be careful" she said.
"You can't just transfer the house because the bank won't let you without the mortgage being refinanced".
You can read the full article that was published in The Australian here: "Debt mixed with divorce creates a money minefield for the unwary"
Coote Family Lawyers are a specialist Family Law firm. Call us now on 03 9804 0035 if you have any questions or concerns about your situation.
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