How Are Debt And Property Divided In A Divorce?

Many of our customers have a lot of questions regarding how the process of distributing property and other assets works in case of a divorce. As a result, our divorce lawyers in perth have brought together guidelines about what you need to know about divorce and property settlement.

How Does The Court Make Property Settlement Decisions?

Financial assets refer to all assets and debts owned by both partners, irrespective of registered names. Property like your family home, bank accounts, cash, investments, insurance policies, businesses, superannuation, vehicles, inheritances, and personal assets are some examples of personal assets. It includes all of your bills, including your loans, mortgage, credit card debt, and other personal obligations. 

While considering how financial assets will be distributed, the Family Court usually follows a five-step process:

1. Figure out the kind of assets there and their worth.
2. Ascertain if a property settlement is necessary.
3. Consider what each person has contributed (this includes non-financial, financial, homemaker, and parent contributions).
4. Consider each person’s future needs.

Who Pays The Mortgage After A Divorce?

After the divorce, who pays the mortgage will depend on the situation and may include the payments at the time of the final divorce settlement. In a divorce, Family Law establishes criteria for property division based on contributions, earning power, rightness, individual needs, and what seems best for the children.

Experienced Divorce lawyers can suggest to you how to proceed with the case with various types of options.  The primary earner continues to make mortgage payments and is eventually repaid by receiving a larger share of another asset. Another option is to share mortgage payments equally or in various proportions between the parties. Alternatively, by transferring a mortgage into their name, one individual can purchase the other’s portion.

Both partners are liable to the lender for the mortgage repayments if the loan is in both partners’ names. If money is not paid, the bank has the legal right to claim the property, which is usually not in either partner’s best interests. If one of the partners refuses to pay, the bank must be contacted immediately and make the temporary arrangements till the divorce is finalized. Another alternative is to sell the property and put the proceeds into a trust account until a settlement amount is made. In this case, experienced debt recovery lawyers can guide you with the right approach.

Steps To Determine The Property And Debt Division

Step 1: Determine What Property You Have, And It’s Worth

The Family Court will usually start by determining the asset pool and its worth. An asset pool is a collection of a person’s entire assets, and the court will use each person’s information to determine what all properties are included in the asset pool.

Real estate, furniture, automobiles, boats, money, businesses, and shares are all examples of property. It also includes property in which the parties have an interest, such as property owned jointly or in trust.

Step 2: Determine Whether Or Not A Property Settlement Is Necessary

The court will then consider whether it is ‘just and equitable’ to intervene and modify people’s property in the second step.

The following are some of the factors that a judge may determine that property division is not equitable:

1. If the marital relationship was only a few months long.
2. If the couple’s money were kept separate and not intertwined during the relationship.
3. If the pair have been separated for a long time (in the case of married couples who have parted but not divorced).
4. if the asset pool is little and there isn’t a lot to split.

Step 3: Take Into Account Contributions

The Family Court will usually look at each person’s contribution as the third step.

A person can make one of three types of contributions:

1. Monetary contributions.
2. Non-financial contributions.
3. Contributions as a mother and a father.

The Family Court will consider the following:

1. Contributions were made early on in the partnership.
2. Contributions were made throughout the relationship.
3. Made after the divorce.

Step 4: Examine Each Person’s Future Requirements

The Family Court to consider each person’s future needs to see if there should be any percentage adjustment to guarantee an equitable property settlement. This is a forward-thinking exercise: what will each person require in the future?

The following are some of the most common issues that the Family Court considers:

1. Age and health of the couple seeking a divorce.
2. Earnings, assets, and financial resources of the couple seeking a divorce.
3. Both people’s physical and mental capacities for work.
4. Whether either party is responsible for a kid under the age of 18.
5. Consider other facts or situations.

Family law cases are complex for everyone concerned. Please contact Perth debt recovery lawyers if you require assistance with a family law dispute or for further information on how assets are distributed in Australia.