The family home in most cases will be the only asset in the bankruptcy which means the trustee in bankruptcy will be keen to realise the interest through selling the property and dividing the proceeds among the bankrupt spouse’s creditors.

Under the Insolvency Act 1986 a trustee in bankruptcy can only enforce a court order to sell a family home after 12 months (unless the court thinks it is reasonable to proceed with a sale). This gives spouses an opportunity to make alternative living arrangements while remaining in the family home.

Where the family home is jointly owned the bankrupt spouse’s share cannot be put into the non-bankrupt spouse’s name without the agreement of the trustee in bankruptcy. The trustee is unlikely to agree as they have a duty first to the creditors who are owed money in the bankruptcy.

When the family home is owned solely by the bankrupt spouse, it is essential to act quickly to avoid the sale of the property by the trustee. Under the Family Law Act 1996, a non-owning spouse has a right to occupy the property but he or she must register these rights at the Land Registry to be able to enforce them against the trustee. Once the rights have been registered the trustee will be unable to sell the home without the express consent of the non-owning spouse.

If the pension is held in a certain unapproved pension scheme, then it is not included as an asset in the bankruptcy. In most cases, the Judge can make orders relating to the pension.

Sometimes a spouse will use bankruptcy to prevent an estranged spouse’s financial claim against him or her. If this happens, then it’s possible for the non-bankrupt spouse to ask the court to set aside the bankruptcy proceedings as an abuse of process (The Insolvency Act 1986 s 282). The question the court will ask is whether the bankruptcy order should have been made in the first place.

There was case of Paulin v Paulin (2009) where the court overturned the bankruptcy proceedings when a husband created a fabricated debt so that he can file for bankruptcy as his only intention (it was found) was to reduce the amount of money the wife would get in divorce proceedings.

It is important that you take immediate advice if you have any suspicions that there may be some foul play. Reaching a settlement before the bankruptcy is always the better way to deal with things in a way that it is not later challenged by the trustee in bankruptcy.

There are too many complications when dealing with bankruptcy and divorce and so taking advice should be a priority!

These are some of the issues and complexities that arise in relation to bankruptcy and divorce. It is important to take independent advice.

Any asset purchased or income gained by you or your spouse during your marriage is a matrimonial asset.

Any asset purchased by you or your spouse outside your marriage i.e. either before you were married to each other or after the divorce.

All matrimonial assets are up for division in a divorce. Even if it’s money you earned from your efforts i.e. from your job. If it was earned during the marriage, it will be divided.

How it is divided is dependent on each spouse’s financial situation. In short, the court will divide it in a way to ensure both man and woman leave the marriage in a healthy financial position.

The division of non-matrimonial assets is more complicated. The simple answer is: if the non-matrimonial asset somehow benefited the marriage, it will be considered as part of the financial settlement.

For example: A car you bought before your marriage is likely to be used throughout the marriage. Although the car is a non-matrimonial asset, it will be considered in the divorce settlement.

Another instance where non-matrimonial assets will be considered in the divorce settlement is when the value of matrimonial assets is not enough to provide welfare for the spouse or kids.

The exclusion of a non-matrimonial asset can be requested at court. The request will likely be granted unless certain conditions come into play (see previous question for those conditions).

Pre-nuptial agreements can be used to protect your assets during a divorce. If you’re already married, you can arrange for a post-nuptial agreement, it provides the same benefits.

These are not legally binding but the court does take them seriously.