Hi there. When a couple separates, the parties usually need to determine how their assets and debts will be divided. If the couple was married or in a de facto relationship (i.e. a domestic dependent relationship lasting at least 2 years), there are special legal rules that apply to the division of the couple’s property. The information below explains these rules and how they may apply to your situation.

A debt owed by a party to a marriage, or de facto relationship, is considered property and divided between the parties on this basis. The parties are free to negotiate how the debt will be divided between themselves without involving the courts. However, if they are unable to reach an agreement and want to obtain a legally binding agreement, they can seek assistance from the courts. Applications for financial orders are made to the Federal Circuit Court or Family Court of Australia (www.familycourt.gov.au). As part of the court process, the parties must attend a formal mediation before reaching the courtroom.

There is no standard formula that a court will use in deciding how to divide a couple's property, including any jointly or singly held loans. Generally, the court considers things such as what each person owns and owes, direct and indirect financial contributions by each party to the relationship, non-financial contributions and their future needs. Where there is documented evidence of particular expenses, such as money spent on a vehicle or repairs, this will form part of the evidence that the court will use to decide on an appropriate division.

If you were not married or in a de facto relationship – for example, your relationship lasted less than 2 years – the above rules will not apply to you. Instead, you are free to negotiate with your ex-partner any arrangement regarding shared assets or debts. You may want to speak to a lawyer to about negotiating on your behalf.

Suggested way forward

It is difficult to predict how property, especially debts, will be divided in the event of a separation or divorce. Speaking to a family lawyer will help you understand your legal rights and options. By pressing the “Consult a Lawyer” button, LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services. Costs for legal advice and representation will vary between providers based on experience and the scope of services.