When a couple separates, one of the most pressing questions is what happens to the debts that are incurred during the period after separation but before divorce is finalised. This can be a grey area in family law, and understanding your legal rights and responsibilities is essential to avoid being held accountable for your former partner’s financial decisions.

At Maatouks Law Group, we regularly advise clients on the financial and legal implications of separation, particularly when it comes to debts and property settlements. If you’re facing this issue, our team of experienced family lawyers can help you navigate the complexities of your situation. Learn more about our family law services here.

Understanding the Timeline: Separation vs Divorce

In Australia, separation marks the end of a relationship, whereas divorce is the legal termination of a marriage. Many couples are surprised to learn that they can be legally separated for months or even years before applying for divorce.

During this interim period, both parties continue to accrue financial obligations. The problem arises when one partner takes on new debts—through loans, credit cards, or other liabilities—which may affect the overall property settlement later.

Are Debts Incurred After Separation Still Shared?

The short answer is: it depends.

Under the Family Law Act 1975 (Cth), both assets and debts are considered part of the property pool that must be divided fairly between separating partners. This includes property, bank accounts, superannuation, and liabilities such as mortgages, personal loans, and credit card debt.

The Family Court considers debts acquired after separation on a case-by-case basis. Several factors are examined, including:

  • Who incurred the debt?
  • Why was the debt incurred?
  • Was the debt used for joint or personal purposes?
  • Was the other party aware of the debt?
  • Did the debt benefit the family or only one party?

If a debt was accrued for the benefit of the household or children—for example, paying rent or school fees—it may still be considered a joint debt, even if only one person took it on.

Debts for Sole Benefit

If one party accumulates debt purely for their own benefit—such as purchasing luxury goods, gambling, or personal spending—the Court may determine that they alone should bear the responsibility for repaying it.

That said, the other party may need to provide evidence that they did not know about or approve of the debt and that it did not benefit the family unit in any way.

This is where experienced legal representation becomes critical. At Maatouks Law Group, our family law team works closely with clients to gather the necessary documentation and argue for a fair division of debts and liabilities during property settlements.

How the Court Assesses Post-Separation Debts

When evaluating how debts should be divided, the Court will look at the overall contributions and future needs of both parties, including:

  • Financial and non-financial contributions made during the relationship
  • The capacity of each person to repay the debt
  • Whether children are involved and who has primary care
  • The nature and purpose of the debt
  • Whether the debt was necessary or reckless

If it is proven that a party recklessly took on financial liabilities after separation, the Court may exclude those debts from the joint property pool or assign them solely to the person responsible.

Protecting Yourself Financially After Separation

If you’re concerned about being held liable for your ex-partner’s spending or borrowing after separation, here are some practical steps you can take:

  1. Close or separate joint accounts as soon as possible.
  2. Notify creditors in writing that you are no longer jointly responsible for future liabilities.
  3. Monitor your credit report regularly for new accounts or suspicious activity.
  4. Seek legal advice immediately to ensure you’re protected from further financial exposure.
  5. Record all post-separation communications and transactions, especially if you’re contributing to household expenses or debts.

Being proactive can make a significant difference in how debts are divided later during the property settlement process.

Can You Still Be Liable for Your Ex’s Debt?

Yes, in some cases. If your name remains on a loan, mortgage, or credit card account—even after separation—you can still be held legally responsible for that debt by the lender. The Family Court may consider this in the settlement, but creditors will still pursue any co-signers or account holders.

To avoid this, ensure all joint financial arrangements are reviewed and, where possible, legally separated or refinanced. It’s also wise to formalise your property and financial arrangements through a binding financial agreement or a Consent Order with the Court.

Our team at Maatouks Law Group can help you finalise these arrangements and protect your long-term financial interests.

Conclusion: Post-Separation Debts Require Caution and Clarity

Debts incurred after separation but before divorce can have serious implications on your financial future. While not all post-separation debts are shared, many can be included in the property pool if they were incurred for the benefit of the family or were reasonably necessary.

If you’re uncertain about your liability or need help with your property settlement, the family law experts at Maatouks Law Group are here to support you. We offer clear, strategic advice and strong representation to help you achieve a fair outcome.

Need legal guidance on your financial rights post-separation? Contact Maatouks Law Group today — your trusted partner in family law.