So, when you are going to separate, you both sit down (without the children, please), over a coffee at your favourite deli and have a calm, rational discussion about how to sort out the family finances. Well, no, unfortunately that’s not how it usually happens.
Almost all separations are emotional occasions. One party may just up and leave, without there being any conversation about who is going to pay what – the mortgage, the utility bills, the kids’ school fees, the daily living expenses – the list goes on. If these matters are not sorted out, either before or shortly after, the separation, the situation can get messy, with applications being made to the Child Support Agency, or to the courts for spousal maintenance. Let’s single out some of those expenses and how you can deal with them.
The Mortgage
If one party is going to stay in the home until there is a property settlement, and the other is to rent, one solution is for the person in the house to keep paying the mortgage, and the other pay their rent. But that obviously depends on whether there is enough income in the family to make it work.
Another solution is to approach the mortgagee bank, explain the situation (they will understand – there’s a lot of it about) and ask them for a moratorium, or grace period, on the loan repayments, until you and your partner can negotiate a property settlement. That will usually be for several months.
Or, the mortgage payments may be ahead, in which case you will have a drawdown facility that can be used, without either of you having to make any payments.
On a principal and interest loan, the principal is your money, the interest is the bank’s. Ask the bank if they will accept interest only payments until there is a settlement.
Do these things before the mortgage payments fall behind. The bank will be more reasonable if you are still up to date with your payments when you speak to them.
Rates and utility payments
Local councils are usually cooperative if you can’t pay the quarterly rate instalments. While they will add interest to unpaid rates, that, and the rates, can be paid at the time of your property settlement.
The utility companies (electricity, gas, water) now have procedures for dealing with situations where the homeowner (or renter) can’t pay their bills. As with the banks and local councils, get in touch before the tax invoice is due to be paid, not after it falls into arrears.
Credit cards
It’s important to find out if you have any liability for your partner’s credit card and notify the card company that you want that stopped. If it’s your card, and your partner is the secondary card holder, consider getting their access to credit cancelled, unless the two of you have reached an amicable agreement about its use.
Child Support
This really is an area where you need to speak to your partner and work out how much they are going to pay to help support the children. If it can’t be agreed on, either party can make an application online to the Child Support Agency for an Administrative Assessment of Child Support. That’s worked out on the number of children, how many nights a year the non-custodial parent will be spending with each child (typically, every second weekend and half the school holidays), and the parties’ last tax returns.
Spousal Maintenance
If you cannot support yourself without a Centrelink pension or allowance and your partner is not helping with the types of expenses set out above, you can apply to the Family Courts for a spousal maintenance order. It’s up to the court to decide whether you need it and whether your partner can pay. Such orders usually last until there is a property settlement.
Questions
This blog has only touched on some of the more usual financial issues that can arise when a couple separate. There can be of course be many more. Our Family Law Team at Tonkin Legal Group can help you navigate through these issues.
Watch our free on-demand webinar on separation
If you want to learn more about how to separate safely from your partner, watch our new, free on-demand webinar “Separating from your partner” which explains the legal, financial and practical implications of leaving your partner.
