Financial Strategy Post Separation

Being Financially Savvy


Bank accounts are the first vulnerable item to look at after any separation. By now you will have set up your own account (and if you have not done so you will leave immediately and do so) and made sure your wages or Centrelink benefits are paid into same. Where does that leave other accounts and outgoing such as mortgage payments or loan payments and who should pay them?

Mortgage – to pay or not to pay?

More than likely you will have purchased property in joint names with a joint mortgage. This means that both of you are equally responsible for mortgage payments and if there is a default the bank will not care about your separation and simply pursue both of you (usually the person with a higher income has more to lose).

However, it may not be practical for you to pay your share or the entire mortgage payments, depending on your individual circumstance. The first thing you should do is make a budget and work out what you can and cannot afford (we are afraid that trip around Europe might have to wait until you have sorted out your financial affairs between you and your ex spouse).

If you are renting and not living in the former matrimonial home there may not be enough money to go around for you to pay your share of the mortgage. In such a case, particularly if the other person is still living in the home, it might be reasonable to expect them to pay all of the mortgage payments.

However, it all becomes a balancing exercise of what works and what does not. A court would take a dim view of a person who did not pay the mortgage simply because they did not want to and thus a valuable asset of the relationship is lost. This will be of little consolation if the asset is lost and there is nothing to divide at the end of the matter.

When deciding what to do about mortgage payments think long term. How would a bad credit rating affect your future prospects of obtaining another loan or mortgage? If you genuinely cannot meet your share of the mortgage you should have a meeting with the bank manager and discuss options with them. Banks can do things like switching a loan to interest payments only or look at a hardship application. If for any of this you need the consent of the other party and they will not give it, you might need to commence proceedings and obtain some interim procedural orders.

At the end of the day both of you should work on preserving assets for division, as both of you will benefit.


Bank accounts with money in them – to take it or not to take it?

Often people wonder if they can take joint savings out of a bank account or even spend the re-draw on the mortgage.

As you are debating what to do about joint savings, and it might be the case you really need the money, we remind you again of our previous saying possession is nine tenth of the law. What invariably happens is that one of you will be trusting and convincing yourself it is not nasty and there is no need to get nasty and before you know it the ten thousand dollars in the joint account are gone. Now it is too late to do anything about this.

Of course your lawyer can write to your ex spouses lawyer and threaten the end of the world, however, by the time your matter comes before a Judge or Magistrate it will be most difficult to get anyone interested in adding the money back into the pool (not the swimming pool but the asset pool, what you and your ex spouse own).

If you are unsure the best course of action is to take the money and put it into an account where it cannot be accessed or spent. That way you are protecting it from being spent and it will still be there for division when your matter is either determined by way of final hearing or you both reach agreement and sign a set of consent orders.  

Do I report the car as stolen or not?

You might be driving the family car which happens to be registered in your ex spouses name. Your ex has asked for it back and you have said no (perhaps using slightly stronger language). Now your ex is resorting to techniques of intimidation and bullying, telling you that they will report the car as stolen and you are not sure what to do.

At the end of the day the Police will not get involved in a property dispute between spouses. It is a matter that will be sorted out in the Family Court.

Beware though what might happen is that the ex, who by now is so angry at you for not doing what you are asked to do, they will simply go and take the car (assuming they have a spare key).

Again the Police will not be interested. It is still a matter for the Family Court. And again your lawyer can write letters at great expense to you but it probably won’t lead to the return of the car.

What to do? Make sure when you leave you have all the keys to the car and never leave it somewhere where the ex can simply get in and take it.

Conclusion

These are only some of the financial issues you will need to consider after a separation. In future posts we will revisit some of these and discuss them in more detail and try and draw on our experiences from years of practicing in the area of Family Law.