A groundbreaking Australian study has investigated a hidden form of financial abuse that leaves domestic violence survivors facing bankruptcy, homelessness and poverty, with researchers warning urgent reforms are needed.
Australia’s first national study of coerced business debt has revealed its lasting impact on domestic abuse survivors.
The research, led by Associate Professor Vivien Chen from Monash Business School and Jasmine Opdam, Senior Policy and Advocacy Officer at Redfern Legal Centre’s Financial Abuse Service NSW, in collaboration with the Economic Abuse Reference Group, shows that business structures are being weaponised to perpetrate financial abuse, resulting in long term economic hardship.
The study highlights a critical gap in existing legal and financial protections, and calls for urgent reforms across industry, regulatory and support systems.
“Victim survivors are pursued for huge debts, even multi-million-dollar debts, from their ex-partner’s business that they simply can’t pay,” A/Prof Chen said.
“In many cases, victim survivors knew nothing about these debts before they were contacted by debt collectors.”
Inside Australia’s first national study
A/Prof Chen and Ms Opdam set out to fill a knowledge gap flagged by government agencies.
The study was conducted in collaboration with the Economic Abuse Reference Group, a network of over 60 Australian community organisations advocating to reduce the financial impacts of family violence.
They interviewed 18 frontline professionals from 10 community organisations who regularly assist survivors.
These caseworkers described patterns of coercion rarely captured in research before.
Perpetrators forged signatures, pressured partners, impersonated them digitally, or secretly installed them as company directors.
Some victim-survivors only discovered the debts when the Australian Tax Office or private collectors demanded payment.
A/Prof Chen said existing studies focus primarily on consumer debt.
“Business debt is an under-researched problem,” A/Prof Chen said.
“We wanted to shed light on how victim survivors are coerced into business debts, the impacts, and what we can do to address systemic weaknesses.”
The hidden mechanics of abuse
The study found that coerced business debt disproportionately affects women in heterosexual relationships.
Unlike consumer credit, business lending falls outside many legal safeguards designed to protect borrowers.
“Victim survivors who experience coerced business debts don’t have the benefit of free dispute resolution or hardship policies that exist for consumer debts,” Ms Opdam said.
“Business creditors are not required by law to have hardship policies. When they are pursued, victim survivors usually can’t afford a lawyer, and complex business structures are costly and complex to unravel.
”The fallout was devastating: bankruptcy, loss of homes, ruined credit histories, and barriers to welfare support – all of which undermine survivors’ ability to rebuild their lives.
The human toll
The study found the financial effects were compounded by emotional and physical strain.
“Family violence is one of the main causes of homelessness among women,” Ms Opdam said. “Financial abuse leaves victim survivors in a cycle of poverty. There are also mental health impacts, some so severe that they are unable to work or regain their independence.”
Caseworkers told the researchers that business debts often triggered more aggressive collection practices than household loans.
Director Penalty Notices, GST obligations and court actions piled on pressure for survivors already fleeing violence.
Large coerced debts could be devastating, A/Prof Chen said.
“They cause immense stress, at times to the point of suicide. Victim survivors need early intervention to prevent their debt problems from escalating and causing further, irreversible harm.”
Fixing a broken system
The study calls for a series of reforms to prevent and mitigate harm from coerced business debt. Key recommendations include:
- Tightening safeguards in the director and ABN registration processes
- Extending consumer protections to small-business lending
- Reforming corporation and tax laws to recognise that directors may be prevented from managing companies due to family violence
- Family violence policies modelled on the Australian Banking Association’s guidelines to encourage business creditors to respond constructively.
“We need to address system vulnerabilities which allow perpetrators to impersonate victim survivors in the director appointment process,” Ms Opdam said. “Real-time identity verification, for example, could help prevent victim survivors from being signed up as directors fraudulently.”
The researchers argue reforms must also be backed by early detection, greater funding for community legal services to assist with coerced business debts, and stronger public awareness.
A/Prof Chen said professionals such as accountants, lawyers and brokers can play an important role in disrupting financial abuse.
Being alert to the risks that some business structures and financial arrangements pose to victim survivors, recognising signs of financial abuse, explaining the risks, and pointing victim survivors to help, are instrumental in the early detection and prevention of coerced business debts.
“As a community, we need to be more aware that business structures are weaponised to perpetrate financial abuse,” A/Prof Chen said.
“Increasing community awareness of director responsibilities and liabilities, including the potential consequences, may help victim survivors to be more aware of the risks, and empower them to seek advice.”
Read the report.
If you are experiencing financial abuse, please call 1800RESPECT for support and referrals. The Small Business Debt Helpline (1800 413 828) can provide advice on business debt nationally. In Victoria, Each Small Business Financial Counselling can be contacted by email: Fcintake@each.com.au or Ph: 9871 1817. In New South Wales, Redfern Legal Centre’s Financial Abuse Service can be contacted at rlc.org.au/fas.
