DIVORCEES MAY HAVE ASSETS TAKEN TO FUND EX-SPOUSE’S DEBTS!

This dramatic headline appeared in The Times in May this year, when a High Court Judge confirmed that financial orders between spouses (whether by consent or otherwise) within divorce proceedings are not safe from creditors.

In future, if a husband or wife goes bankrupt, then the assets which have been secured by the non-bankrupt spouse will be exposed to creditors and the bankruptcy trustees will be able to pursue the non-bankrupt spouse for up to 5 years.    This ruling also applies retrospectively to all such orders within the past 5 years.    

In the case in question the wife petitioned for divorce and in the financial settlement her husband was ordered to transfer the house to her.    The husband subsequently became bankrupt.    This led to a High Court ruling that the transfer of the house to the wife should be set aside notwithstanding the existence of a Court Order (whether by consent or otherwise) providing for the transfer to the wife.      Quite simply this ruling means that the wife may have to return her husband's share of the house formerly secured by an Order of the Court.     

A similar case was heard by the Court of Appeal very recently.     This confirmed that irrespective of the financial settlement in divorce proceedings, a property can be sold without recourse to the resident spouse, to pay off the bankrupt partner's debts.     

This situation has been predicted to affect at least 20% of the 120,000.00 people expected to file for bankruptcy this year.     

David Roberts, Head of the Family Law Department at Sandersons, Solicitors, who is an advanced Member of the Family Law Panel, and a past President of the Hull Incorporated Law Society, has particular expertise in complex and unusually high value financial settlements in divorce proceedings.     He said that "The recent rulings on determining fairness, partnership and compensation in divorce settlements have increased the importance clients need to give to the financial impact of divorce.    These latest rulings are also extremely important and will certainly influence divorce settlements especially where the prospect of bankruptcy is likely".

If you need help and advice on any aspect of family law including the above, please contact :

David Roberts

Sandersons, Solicitors

17-19 Parliament Street

Hull, HU1 2BH 

Tel: 01482 324662

e-mail : enquiries@sandersonssolicitors.co.uk

 Source: The Journal, September 2007