Going through a divorce can be one of the most stressful things you will ever experience, and while it is never easy to go through this type of separation, things can seem a million times worse if you are trying to divorce someone who is bankrupt (or if you yourself become bankrupt during the divorce process). It isn’t, however, the end of the world; while bankruptcy does make separating from your spouse more complicated, the process will still move smoothly if you have a qualified, specialist solicitor on your side to guide you through the divorce procedure.
What Exactly Is Bankruptcy And How Does It Work?
First of all, you should try and get to grips with the basics of bankruptcy and how it works. In England, a court must issue a bankruptcy order against the debtor, which generally happens either when you – as the debtor – apply to the court or when creditors apply to make you bankrupt. This can happen if you owe them just £750 or more. When made bankrupt, you will be put on a bankruptcy register (the ‘Individual Insolvency Register’), you will have to make sure that you follow the rules called ‘bankruptcy restrictions’ and also use your assets to pay off your debts. Of course, this gets more complicated if you are currently going through (or about to go through) a divorce, especially if all of your assets need to be shared with your spouse. It is worth noting that the whole bankruptcy process differs in other countries of the United Kingdom and that, in England and Wales, you are usually discharged from your bankruptcy after 12 months of being on the register.
How Will Bankruptcy Affect Your Divorce Settlement?
Of course, the main thing it will affect is your finances and the types of settlement you will be likely to get after the divorce. Generally, when a marriage breaks down, the assets are divided between each party, but in the case of bankruptcy, these assets (such as half of the family home) won’t necessarily belong to the debtor any more – they will belong to the Trustee in Bankruptcy. So what happens?
First of all, the matrimonial pot of assets will be much smaller than expected, which is something you should prepare yourself for. In terms of property, if a family home is jointly owned, it can’t simply be transferred to the spouse without the consent of the Trustee in Bankruptcy. This consent isn’t easy to get, however; the spouse will need to buy out the debtor’s share at a reasonable price for this to happen. If you have children and need maintenance money from the debtor, you should also be aware that most of his or her earnings and savings will revert to the Trustee, leaving little left for the maintenance payments or any lump sum you feel you may be entitled to.
What Can You Do About It?
If you find yourself in this situation, it goes without saying that it can be a very stressful and trying time, but you don’t have to go through it on your own. Hiring a specialist family law solicitor will take a lot of the weight off, giving you peace of mind that everything is being handled professionally. If the bankruptcy hasn’t yet officially been issued (for instance, if your spouse is threatening to file for bankruptcy), you will need to apply to the family court as soon as possible. You may be able to organise a financial settlement before the bankruptcy becomes final, eliminating a lot of frustration later on in the process. Sometimes, debtors will apply for bankruptcy in order to slow down the divorce process or make it more complicated for the spouse than it has to be. In this case, even if the bankruptcy is already taking effect, the spouse can still apply to the court to have the bankruptcy annulled if the debtor isn’t actually insolvent.
Going Though Divorce? Worried About Bankruptcy? Get In Touch Today
So, if you’re currently going through a divorce or are about to start proceedings and need further advice on any aspect of the process, contact us today. We are specialists in divorce law and can guide you through your divorce no matter what obstacles seem to be standing in your way.
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