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The effect of HECS debts in property settlements

The effect of HECS debts in property settlements

With a high number of people pursuing tertiary education, following separation it is important to consider what happens to any HECS debts in a relationship.

A HECS debt is treated similarly to other debts incurred by a party or parties in a relationship. A HECS debt will either be treated by the Court as:

  • A personal liability to one party of the relationship, and will not be included in the joint pool of assets and liabilities; or
  • A joint liability of the relationship, and will be included in the joint pool of assets and liabilities.

When a HECS debt has been found to be a personal liability

In Mullins & Birchmore [2014] FCCA 1297, the husband’s HECS debt was found to be a personal liability. The Court found the wife had financially supported the husband through his studies, had assisted in repaying a previous HECS debt the husband had incurred, and that the husband had only worked for two and a half years in a related field since completing his studies. The husband also said that he intended to stop working in the field he had studied in, and was looking at continuing his studies. 

In Zimin & Nickson [2014] FCCA 206, the wife’s HECS debt was found to be a personal liability as she had not completed her studies at the time of separation and she alone would benefit from completing her studies.

In Partington & Cade [2008] FamCA 945, both parties had HECS debts of similar amounts, and the Court found that each party was to be responsible for their own HECS debt. This was because neither party had contributed towards either of the HECS debts, neither party had gained employment in a field related to their employment, and it did not appear likely that either party would repay their HECS debt.

When a HECS debt has been found to be a joint liability

In Lane & Owen [2010] FamCA 575, the wife’s HECS debt was found to be a joint liability as the husband’s HECS debt had been repaid prior to separation from joint funds of the relationship.

In Berry & Berry [2010] FMCAfam 542, the wife’s HECS debt was found to be a joint liability. The Court found this because the husband had agreed to her studying, and once she had completed her studies she gained relevant employment and became the main income earner in the relationship.

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Disclaimer: The information contained in this blog is for informational purposes only and is not legal advice. Nothing in this blog should be deemed to create or constitute a solicitor-client relationship between any readers and Swan Lawyers. A solicitor-client relationship is created only when this firm agrees to represent someone and a written engagement agreement or engagement letter is signed by both the client and solicitor. In all cases, the reader should consult his or her own solicitor for advice. The information in this blog is based on Australian law.