WA "Property" settlement Q... (and by "property" I mean debt)

[Match]

Hi all! Does anyone have any general knowledge about property settlements for two people who, while not technically poor, own nothing outright and - rather than an asset pool that needs to be divided - they just have a selection of random debts as far as the eye can see?

They (A and B) are separated and each paying towards the various debts they have in their own names (acquired by both during their 16 year marriage).

B continues to pay A an amount towards the joint mortgage, which is in negative equity (A lives in the house while B rents).

A refuses to sell the house but cannot afford to get a home loan in their name alone. If B stops paying the additional amount the loan will likely fall in arrears and be sold by the bank - likely at a greater loss than if A and B were proactive and sold the house ASAP.

A wants to take B to court for a "property" settlement because A doesn't think it's fair that A has more debt than B. A reasons that if more general debt fell to B, A could afford the home loan in their own name and would not have to sell the house.

A significant portion of A's debt is a car loan for a fairly flash car. Would a court ever transfer some of that debt to B rather than A being obligated to sell the flash car and replace it with something more modest in order to reduce the debt?

B wants to sell the house and have a "clean break" as much as possible. B would like to avoid falling into legal debt on top of the existing debts.

Does anyone know how a court would call this situation? Do people with no assets really go to court for a property settlement to split debts?

 

[Rod]

Does anyone know how a court would call this situation?

Not really. I can't competently comment on a 10 line post after a 16 year marriage.

If you really want a better idea you need to see a lawyer and give them a complete rundown on earnings, employment history, kids, etc.

And generally the person with the lowest debt, or more financially responsible person, wants to sever their joint debts.

 

[sammy01]

You're better off avoiding court. Courts cost money... So just more debt.
More info is required in order to adequately answer your questions...
So income... do both have similar incomes?
Do both have similar superannuation?
Are there kids involved?

Id be thinking B needs to stop paying towards the mortgage to force A to deal with this situation. A seems to taking advantage here.. A has the flashy car, A is living in a house that is subsidised by B.

 

[Match]

Thank you Rod and Sammy,

B has seen a lawyer but their advice seemed really aggressive (stop paying mortgage immediately and apply for an exemption to mediation to take A straight to court). It was a reputable firm and cost a lot for the consultation appointment. It felt to me that the lawyer didn't really have regard for the best outcome for the family (there is a child involved - a 10 year old daughter - Sammy you gave me good advice when I hopped on a different thread about A withholding access after I went to the movies with B and the daughter).

I'm still crossing my fingers for mediation, but it is a highly emotional situation after a long, if not particularly happy, marriage and there's a lot of resentment in the mix. In any event, I'm certainly keen to do as much at-home research as possible to limit any legal costs. I'm reading the Family Law Act and outcome files, but I really appreciate your input.

• A lives with a retired older sister who receives a UK pension and helps out with the kid, enabling A to work full-time (this was the case before the separation).
• B also works full-time.
• B pays an assessed child support amount.
• B pays private school fees directly.
• B contributes to the mortgage (but less than half).
• A earns about $15k more than B annually.
• A and B would have roughly similar amounts in super (A may have slightly more).
• In approx. 10 years, A is also entitled to a significant pension from a former public sector career in Scotland, from which A will be able to draw about $75k as a lump sum and then receive regular pension payments. The whole pension is worth about $400k.
• A will also be entitled to a basic UK state pension of roughly $100 a week.
• B is also entitled to the same smaller state pension.

Their only joint debt is the mortgage on the house, which A refuses to sell (I can understand this - it's the daughter's primary home, and it would have to be sold at a loss). As B wanted to gradually taper off the contributions to the mortgage, B asked about A's plan for eventually getting a home loan. A communicated the plan is to take B to court and force B to pay. Hearing this, B is now going to stop the mortgage contributions and save them for a lawyer.

A is also planning to reduce the number of nights the daughter sleeps at B's house in order to force up the child support assessed amount that B has to pay (which is obviously very upsetting news, as B wants to see the daughter more, not less).

A seems convinced of a big win in court and is intimidating in emails, but I'm struggling to understand the logic, particularly when there's essentially no asset pool (just liabilities), A earns more, and overall financial contributions throughout the relationship would work out pretty equally.

Their individual debts are frankly huge. A has about -$90k; B has about -$55k. As far as I can tell, A wants to transfer some debt to B so A can get a home loan and stay in the house. Is this possible? I've read that marriage is an "economic relationship", so it doesn't matter what asset or liability is in whose name, but I've also read that "Although a court does have power to divide property, it does not have the power to divide debts or change your contract with a lender (whether you are the borrower, or guarantor of a loan)."

Based on threads on this site, I'm given to understand A would not be entitled to spousal maintenance from B, but I'm unclear on how a court-ordered property settlement would shake out.

 

[sammy01]

what sort of access do you have with daughter? What sort do you want? How long since separation?
I reckon apply to court - get decision on when you see the daughter done at the same time and that way you don't have to be bullied about child access.

Stop paying school fees. OR pay in accordance with your % of care... She stops you seeing the kid you pay 0%school fees

 

[Match]

Thank you Sammy,

Oof, really? Before mediation? I know it's unlikely an agreement will be reached, but I was under the impression the courts don't appreciate overly eager litigation (i.e., before any attempt at mediation)? Your advice on this forum always so measured, takes human emotion into consideration, and 'gives peace a chance'. If you're recommending court, it doesn't sound like we have a chance for peace!

If B stops paying school fees, it's more likely that the daughter will have to move schools and that A will tell the daughter - and everyone else - this is due to B not paying, rather than A making access any easier. It's not yet a year since the separation.

Daughter sleeps over once a week and B sees her once during the week (but not overnight). A has said this will reduce to 3 nights a month so that child support payments will increase. B would like 2 nights a week (would prefer 3 but can't manage school pick ups and drop offs with work at the moment) and a couple of solid weeks over the holidays.

I'm planning on buying that Larkins book you recommended on another thread and getting B to read it.

If A initiates court (over money), can B ask that access issues be included in the case? Would it be smarter to go ahead and be the applicant, rather than the respondent?

I seriously appreciate the advice

 

[Tremaine]

The reason nobody can really give an idea of what the outcome might be is because there's no real rules about what a fair property settlement looks like, but the court does follow a four-step process when it's trying to find a solution:

1. What's the value of the shared asset pool?
2. What were the financial and non-financial contributions of each party?
3. What are the future needs of each party?
4. Is the settlement just and equitable?

As you can see, there's lots of little aspects that will be taken into account. This is just a hypothetical of things that might count in other matters, but maybe A spent time out of the workforce to perform house duties and raise the child; maybe B had a bigger financial contribution due to a settlement on a workplace injury that left B a paraplegic; maybe A has a HELP debt that warrants sharing, maybe A paid off B's personal loan early in the relationship.

All of these things will affect the financial/non-financial contributions and future needs of each party, which will in turn affect the percentage of the shared asset pool which will be divided between A and B.

Parenting and property matters can be (and often are) heard together (and the court generally does a much better job of considering the matters separately than the parents do). Being the applicant or respondent won't make a difference to your case.

If I were B, I'd make it clear to A and to anyone else that inquired (such as CSA) that I'm not agreeable to any change to the existing care arrangements, and I'd be commencing mediation so I had a s60I available if A ever decides to make such a change unilaterally. There are lots of things in family law that should take a more gently-gently approach and can be resolved without going to court, but changing care arrangements without agreement usually needs firmer action because there's a risk new arrangements will become the status quo, and once they're the status quo, they become difficult to change later on.

 

[sammy01]

So yes, mediation is required before you can apply to court. I think that isn't necessary if the court application is just about $$ and not kids.
So ask Relationships Australia to sort mediation. Chances are it wont even happen. The ex will refuse. But get started on this.

Can you change your work situation? Mate if you can manage and want to then you should expect close to 50/50 care. 35% is a golden number. 35% care over the year significanly changes the game as far as child support and family tax benefit goes. But this is a bit dependent on your income.

My thinking goes like this. Right now she holds the cards. She is living in the house and you're scared to not contribute (you are burning money). She gets to choose when you see the kid. She is in control. Only about 5% of cases go to final hearing for jugde to make a decision. So 95% of cases are either done without the need of court OR with done by consent but with a court application being made. So you need to do something to change the dynamic here. To change the status quo because the status quo atm suxs. She ain't gonna change it, so you're gonna have to.

Yes - if the ex initiates over $$$ you can ask and will be successful in having the parenting matter sorted within the same case