Do I Have to Share Liability for my Former Partner’s HECS Debt?
Should I Discuss HECS Debt with my Brisbane Divorce Lawyers?
When talking to your Brisbane Divorce Lawyers, it is important to discuss all assets and liabilities. This includes HECS debt that you or your former partner have incurred. Depending upon your circumstances, you may have to include that debt in the asset pool to be divided in your property settlement.
Why is HECS Debt Relevant?
Many couples start their relationship while they are both studying, accruing debt along the way. During the relationship, one partner may pay off a HECS debt after he or she starts earning the minimum amount of prescribed income, at which point HECS debt becomes repayable. At the end of the relationship, the other partner may still have a HECS Debt.
For couples who have separated, the way in which a HECS obligation is treated in a property settlement can become a vexed issue. Should the party who incurred the obligation be solely responsible for the debt or should that HECS be treated as a joint liability?
If it is treated as a personal liability of one party, the other party will not generally have to share the burden of the HECS Debt in the property settlement.
If it is treated as a joint liability of the parties, it will be included in the asset pool to be divided, effectively then reducing the net assets that can then be divided between the parties.
In the case of Mullins & Birchmore, the court found that it would be unjust and inequitable in the circumstances of the case to require the wife to contribute to the husband’s repayment of a HECS debt.
The husband was wanting orders so that the wife would pay 70% of the debt, which included credit card debt and HECS debt. In this matter, the court considered that the husband had been the beneficiary of his studies, whilst his wife at the time had worked to support him and the children while he was doing his studies.
The court noted that the husband’s evidence was that he would no longer earn an income from his qualification and that he was intending to be a student for another four or five years. The wife and children had only received some benefit from his qualifications for period of two and a half years and the wife had assisted the husband in paying off another prior HECS Debt. Finally, the husband would not need to pay off his HECS debt until he earned the minimum amount of income prescribed. Given these factors, the court determined that the wife should not have to contribute to repayment of the husband’s current HECS debt and that that debt was the husband’s personal debt.
The Court made orders so that each party retained all assets, liabilities and superannuation entitlements in their respective names.
A HECS debt was found to be a joint liability of the parties in Berry & Berry, where the wife undertook studies with the husband’s agreement. The court was satisfied that immediately following the completion of her studies, the wife obtained employment in line with her newly acquired tertiary qualifications. From the time that she obtained that employment until the end of the relationship, she was the primary and almost sole income earner for the family.
Contact LGM’s Divorce Lawyers Brisbane
If you are needing family law advice regarding a HECS debt or other advice to resolve your family law matter, contact LGM’s Divorce Lawyers Brisbane and one of our experienced family law solicitors will be happy to assist you.