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Divorce law blog

The effect of bankruptcy on your divorce

15/11/2016   By: Administrator Account

Within divorce proceedings the Family Court can make a number of financial orders in order to fairly redistribute the assets and income between you and your spouse. But what happens if you have been made bankrupt and a Trustee in Bankruptcy has been appointed?

The main role of the Trustee in Bankruptcy is to get in, realise and redistribute your assets to pay your creditors. This means that all your assets pass straight to the Trustee in Bankruptcy and you no longer own them. This has serious implications if you and your ex are heading for a divorce or are already in the middle of divorce proceedings because the whole job of splitting assets fairly becomes very complicated indeed and you need to take specialist advice. 

What about the family home? Often this is owned jointly by spouses. Surely this is safe from your Trustee in Bankruptcy? Well, only your share in the property will pass straight to the Trustee in Bankruptcy but the Trustee will want to ensure as much money is realised as possible to pay off your debts. They will be keen to see the house sold or, at least, see you sell your share in the property. It may be that the Trustee will agree to delaying a sale to allow you and your family time to move out but expect this delay to last no more than a year. 

One thing that does not pass to the Trustee in Bankruptcy though is your ability to make an application to the Family Court for a financial order within divorce proceedings. This is because it is personal to you. The Court of Appeal only this year made it clear that a Trustee in Bankruptcy is not entitled to bring these claims. This will be welcomed by non-bankrupt spouses as they should now not face claims for financial orders made against them by a Trustee in Bankruptcy, whose primary concern will be not to deliver fairness but to maximize the funds available to the creditors.

Nicola Rowlings 
Family Professional Support Lawyer

Laura Smith 
Senior Associate


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