In traditional marriage vows there is reference to “for better or for worse”. In the eyes of the law in most relationships the property values and liabilities rise and fall and in the event of separation the level of matrimonial debt is shared between spouses.
In some marriages, people enter into the relationship with assets or they are debt free and at the end of the relationship there are liabilities that are in dispute. Debt that one spouse has incurred may be passed on to the other spouse in some circumstances. This is known as sexually transmitted debt. In most relationships if a debt has been incurred jointly or in one person’s name with the agreement or acquiescence of the other person, that will be classed as a joint liability.
Apart from obvious joint liabilities such as home loans and personal loans, some of the “sleeper” issues of sexually transmitted debt at the time of separation include:
1. Whether or not a personal guarantee has been given in relation to business loans or as part of security and collateral arrangements with investment properties;
2. Whether or not a loan facility is a line of credit and funds are able to be accessed by either spouse without the consent of the other (a line of credit secured against a home loan is the equivalent of a very large credit card that can be maxed out very quickly).
There are some exceptions to the general rule of the debts of the relationship being shared between spouses. The exceptions include:
1. Circumstances where one spouse has unilaterally incurred debt and concealed the existence of that debt and the debt was not spent on expenses of the relationship
2. If one spouse runs a business and the other spouse is completely excluded from all decisions about the running of the business and debts are incurred.
If you or anyone you know may have concerns about these issues, please contact our firm for advice from one of our family Law solicitors.
