Pioneering research highlights how sophisticated financial abuse tactics leave victim-survivors facing bankruptcy, homelessness, and debts reaching millions.

A new national study has exposed a significant policy blind spot, revealing how business structures are being weaponized to perpetrate financial abuse, trapping women in crippling debt and leading to long-term economic hardship. The research highlights how women in heterosexual relationships are disproportionately the targets of this abuse.

The study, the first national analysis of its kind, was conducted in collaboration with the Economic Abuse Reference Group, Associate Professor Vivien Chen of Monash Business School, and Jasmine Opdam, Senior Policy and Advocacy Officer at Redfern Legal Centre’s Financial Abuse Service NSW. It set out to fill a knowledge gap regarding how company structures are exploited to cause harm.

Victim-survivors are frequently left with huge financial liabilities, sometimes amounting to millions of dollars, after being unknowingly or forcibly trapped in their ex-partner’s business affairs. Frontline professionals interviewed for the study described a consistent pattern of coercive tactics, including forged signatures, digital impersonation, or secretly installing victim-survivors as company directors. In many instances, the women only discovered these debts after being contacted by private debt collectors or the Australian Tax Office.

No Safeguards for Business Debt

A critical finding of the study is that, unlike consumer credit, business lending falls outside many of the legal protections designed to safeguard borrowers.

“Victim-survivors of coerced business debt don’t have access to free dispute resolution or hardship relief like they would with consumer debt,” explained Jasmine Opdam. She noted that business creditors are not legally required to have hardship policies, and the complex business structures victims are trapped in are costly and complex to unravel.

Associate Professor Vivien Chen stated that while Australia has progressed in addressing financial abuse through consumer credit reforms, there has been little recognition of how tax and company systems can also be exploited. “We need to treat coerced business debt as a serious form of economic abuse and design safeguards to reflect that reality,” she added.

Life-Altering Consequences

The consequences of this abuse are often life-altering, resulting in bankruptcy, homelessness, and ruined credit histories. For many, the severe mental health impacts leave them unable to work or regain financial independence.

Ms. Opdam emphasized that family violence is one of the leading causes of homelessness among women, and financial abuse traps victim-survivors in a cycle of poverty, sometimes leading to devastating psychological toll that prevents recovery.

The hardships are illustrated by the case of Monique (name changed for privacy), who discovered she was a director of her estranged husband’s shop after being chased by creditors for business loans, despite never signing any documents. Monique, who had no assets and was relying on Centrelink payments of about $600 a fortnight, was served a bankruptcy notice for an $85,000 debt. Before contacting help, she had withdrawn her entire superannuation, about $30,000, to try and pay the debt.

Calls for Urgent Reform

The research calls for urgent reform to ensure that victim-survivors are not left to carry the burden of debts they never chose to take on.

Key recommendations include:

• Tightening safeguards in the ABN and director registration processes.
• Extending consumer-style protections to small business lending.
• Reforming corporation and tax laws to recognize that directors may be prevented from managing companies due to family violence.
• Developing family violence policies, modeled on the Australian Banking Association’s guidelines, to encourage business creditors to respond constructively.