WHO PAYS THE HECS DEBT AFTER A SEPARATION?

08 SEP 2020

 

A HECS debt is often the sign of having achieved a great accomplishment, but it hangs over your head for many years after having completed your higher education. HECS debts are often hefty and are frequently raised as a liability when determining parties’ asset pools following a separation or divorce.

HECS debts are either classed as a joint or personal liability, depending on the circumstances surrounding the accumulation of that debt.

In the case of Lane & Owen [2010], the Court treated the Wife’s HECS debt as a joint liability because the Husband’s studies were paid for using matrimonial funds throughout the course of the marriage.

In Berry & Berry [2010], the Wife’s HECS debt was again considered a joint liability. The Wife undertook her studies by agreement with the Husband. Immediately following the completion of her degree, the Wife obtained employment in her field of study. The Wife thereafter was the sole income earner for the family.

The Court took a different view in the case of Mullins & Birchmore [2014], where the Husband’s HECS debt was found to be a personal liability. The Court found that 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], the Wife’s HECS debt was also found to be a personal liability. The Wife had not completed her studies at the time of separation and therefore, she alone would benefit from completing her studies.

In the case of Partington & Cade [2008], both parties had HECS debts of similar amounts, and the Court found that each party was to be responsible for their own HECS debt. The reasoning here was that 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.

Whether a HECS debt will be determined to be a debt of the relationship or a personal debt largely depends on the circumstances surrounding the party’s studies and who the education benefited.

If you require more information on the above please contact Nevine Youssef on nyoussef@marsdens.net.au or by phoning 02 4626 5077.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

 

 

 

 

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