Many of us enter into new relationships with all the best intentions in mind and with no expectation we will be left with a life-changing debt. What’s worse is if it is not a debt that we are personally responsible for.
Sexually transmitted debt (STD) occurs when one partner takes responsibility for the debts of their partner, wholly or partly, and either willingly or unknowingly. STD is a common and an emerging issue in family law matters, and in some case, is the cause of a breakdown in parties’ relationships.
One common example is a credit card opened in joint names but utilised by only one party, either solely or largely by that party. At separation, such credit card debts will form part of the asset pool and are considered a ‘joint liability’ as is recorded by its registration holding. This could have serious consequences for the non-spending party, who may not only find themselves in a position where the matrimonial asset pool has been diminished by the large debt, but also end up being on the hook for major debts they are not responsible for.
There are a number of ways one can avoid contracting a STD.
Firstly, avoid having a joint credit card unless it is agreed between you and your partner that they will be exclusively used for joint living expenses. If you do obtain a joint credit card, please ensure that it has a low credit limit which cannot be raised without your approval, and that any amount accrued are paid off equally by you and your partner.
If a home loan is in question, avoid taking out a joint home loan where your name is not on the Title of the property in question. Similarly, make sure that both yours and your partner’s consent are required before any further money can be drawn down on the joint home loan.
Another alternative to protect your assets is to not only keep them separate, as best you can, but to also consider setting up a Binding Financial Agreement otherwise known as a pre-nuptial agreement. In this scenario, your partner must also be on board with entering into such an Agreement. This Agreement may well benefit both parties as it sets out the financial expectations between the parties including who is to keep which asset and who is responsible for which debt if the relationship ever breaks down.
Should you require more information, please do not hesitate to contact one of our friendly family lawyers to discuss.