Friday, October 01, 2010

What Happens If My Spouse Goes Bankrupt?

If your spouse is adjudged bankrupt whilst Divorce Proceedings are ongoing then any subsequent agreement concerning the Matrimonial Finances can be set aside by the Trustee in Bankruptcy. Any transfer of property made by the bankrupt would be void except where it is made with the consent of the Court. What this means is that a Consent Order needs to be finalised in order to escape the Trustee in Bankruptcy seeking to reverse any such transfer.

Frequently in Matrimonial Finances the equity in the Former Matrimonial Home is not distributed on an equal basis. If one party receives more than 50% and the other party subsequently goes bankrupt then there is a risk that the Trustee in Bankruptcy will seek to have that transfer of the additional percentage set aside. It is important to act quickly and ensure that the financial matters on Divorce are concluded as swiftly as possible.

In a recent Appeal Warwick (Formerly Yarwood) v Trustee in Bankruptcy of Clive Graham Yarwood [2010] EWHC 2272 (Ch) the High Court ordered that the transfer to the wife of an additional 25% of the property should be given over to the trustees dealing with the husband's bankruptcy as a transfer of the 25% share had not taken place prior to the bankruptcy.

There are other cases which have caused alarm with one spouse deliberately going bankrupt in order to avoid the other's claim. In this instance the reverse happens and there is an attempt to declare the Bankruptcy void as to preventing the transfer of the property to the other spouse.

It is important to take legal advice on all issues when contemplating Divorce particularly if one of the parties is potentially insolvent.


Personal Injury Liverpool said...

Divorce is a very worst situation that coming in anyone's life..

divorce online said...

Nice info! One must know about it when he/she is planning to go for divorce. Thanks for explaining.