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Steve’s marriage fell apart. Then he discovered a $25,000 debt

By Emily Chantiri

When Steve’s* marriage came to an end, his biggest surprise came when he discovered the large debt left from his wife’s prolific spending.

As the sole bread winner, Steve had paid little to no attention to where or how funds were spent. It was only after their split, her spending habits and debts surfaced. His wife had lied about the costs of her purchases, some of which included a car, travel and clothes.

Hidden debts and secret bank accounts can be unwanted surprises during a divorce.

Hidden debts and secret bank accounts can be unwanted surprises during a divorce.Credit: Karl Hilzinger

After separating, she secretly acquired a credit card in their joint names, running up an additional credit card debt of $25,000. As they were technically still married at the time, Steve was legally liable, and the burden of repayment fell entirely on him, as she had no earnings.

Steve quietly accepted the debt as his to pay. He struggled for the next two years to work to pay it off. They used the proceeds from the sale of their home to settle their personal debts.

For someone in their late fifties, Steve’s confidence took a blow, as he was faced with the reality of having to start from scratch to his build his finances. However, his story is not an uncommon one.

Is financial infidelity a crime?

Head of Family Law at Australian Family Lawyers, Bill Kordos said, in Australia, financial infidelity itself isn’t a crime, but it can have legal ramifications, particularly in divorce cases.

“While The Family Law Act 1975, also doesn’t explicitly name financial infidelity in its terms, case law does show that non-disclosure, hiding assets or trying to keep money secret plays a significant role in how the property pool is ultimately calculated and divided,” he says.

“Importantly, a party can argue that some, or all of the debt can be apportioned by the court regardless of the legal entity.”

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He gives an example of a wife whose husband secretly spent over a hundred thousand dollars on internet chat and adult sites, culminating in an online affair. Another matter involved gambling addiction where the other party did not disclose extensive PayPal and gambling accounts.

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“These transactions were only found through discovery, and we successfully argued the funds should be notionally added back to the pool for division.”

Red flags

Accountant and co host of the I Can Be Wealthy podcast, Salena Kulkarni, says it’s important to understand that if you’re married or in a de-facto relationship, whether you choose to combine your finances or keep them separate, debts will mostly be treated as jointly held, regardless of whose name the debt is in.

Pay attention to red flags, she adds. These can include behaving secretively about how purchases have been funded, keeping a separate bank account that they refuse to share details of, insisting on managing all the bills without transparency, reacting defensively when money is discussed, unexplained withdrawals or missing statements.

If you find yourself left in debt following a divorce or break-up, Kulkarni offers the following tips.

  1. Get clarity on the exact extent of the debt position and timeline. Request copies of all debts and statements.
  2. In the event of a separation, freeze all joint accounts. This will give you time to get clear on the extent of the debt and prevent cash being drained from your accounts.
  3. Get legal advice as quickly as possible. Debt liability can be varied depending on whether you’re de facto, married, or separated and depending on how and when the debt was incurred.
  4. Protect yourself from further debt by requesting the three big agencies freeze your credit (Equifax, illion and Experian) and monitoring your file for unfamiliar activity.
  5. Seek financial support. If you find yourself carrying debt unexpectedly, you not only need a plan to extinguish the debt, but support in how to rebuild your confidence and sense of control.

*Names changed to protect identity.

  • Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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Original URL: https://www.brisbanetimes.com.au/money/planning-and-budgeting/steve-s-marriage-fell-apart-then-he-discovered-a-25-000-debt-20250701-p5mbnc.html