How Your Divorce Can Be Affected by Bankruptcy
Getting divorced can be an extremely stressful process. Ending a marriage is never easy, and the divorce process can seem far more stressful if a bankruptcy rears its ugly head. If the person you are separating from is already bankrupt when you commence divorce proceedings, or if you become bankrupt during the process, it can seem like the end of the world.
Although bankruptcy does complicate matters, a divorce can still be concluded without fuss as long as you have an experienced, specialist solicitor to help you through it.
Here at Bonallack & Bishop we act for clients nationwide. And particularly with social distancing following the outbreak of the coronavirus, if you can’t meet your solicitor face-to-face, then it makes no difference where they are – but it does matter, if like us, they’re happy to communicate with you by phone, email and Zoom or FaceTime video call. We act for clients nationwide – in fact around 40% of our clients are not local.
Call FREEPHONE 0800 1404544 or Email Us Now for Your FREE Specialist Divorce and Family Law Advice. Your first phone call, and your first 30 minute appointment, are both FREE.
Is There a Difference Between Bankruptcy and Insolvency?
Yes there is, and in the UK it’s a pretty fundamental difference.
• individuals become bankrupt
• companies go insolvent
What Does Bankruptcy Mean?
If you think this might apply to you, it is important to understand the basics of bankruptcy and how the process works.
Rules about bankruptcy processes, timescales and procedures vary across the UK, but in England, the process starts with the court issuing a bankruptcy order against the debtor. This happens when the debtor themselves applies to the court to be made bankrupt, or when the people who are owed money apply to court. Bankruptcy proceedings can be started with debts as low as £5000.
Once the court has decided that someone is bankrupt, their name is listed on the Individual Insolvency Register, or the bankruptcy register. There is a long list of rules and restrictions which have to be followed, and the debtor has to make sure that these are followed.
Any assets, including your share of any family business, will be used to pay off the debts, and this is where things get complicated if you are going through a divorce and someone else is expecting a share of the assets.
Normally, people are taken off the bankruptcy register (known as being discharged) after a period of 12 months.
Bankruptcy and Your Divorce
The main thing which is going to be affected if bankruptcy is a factor in your divorce is finances and the settlement you will receive.
In most cases, when a married couple separate, the assets are split between the two parties. If bankruptcy is involved, many of the assets involved, such as half of a home, may not legally belong to the debtor any more but to the Trustee in Bankruptcy. So where do you stand?
In the case of bankruptcy, the first thing to be aware of is that the pool of joint resources may be a lot smaller than you had imagined.
If your spouse has agreed to let you stay in the family home, the transfer of his or her share in the house has to be approved by the Trustee in Bankruptcy, who will expect a reasonable price to allow this to happen.
Click here to find out more about divorce and financial settlements.
Click here to find out more about divorce with a business involved.
Bankruptcy and child maintenance
One of the most challenging aspects is how to allocate and pay for child support. As most of the bankrupt person’s earnings and savings likely to go to the Trustee, there may be very little money left for lump sum payments or more regular maintenance payment arrangements. However, in theory at least, bankruptcy should not affect the liability for payments made towards child maintenance. Even if someone previously owed money in relation to their child-support debt, bankruptcy does not excuse the payment of these obligations which must still be paid.
Insolvency and Divorce – What Should I Do About This?
These sorts of complex situations can be very trying and stressful. You don’t have to try to pick your way through the process on your own though, as having a specialist divorce solicitor will allow you to share the burden and allow you to relax, knowing that a professional in taking care of everything for you.
If the bankruptcy proceedings haven’t officially started, or in cases where an ex-spouse is threatening bankruptcy, it is very important to go to the Family Court as soon as you can. It is possible to come to a financial arrangement with your spouse before the bankruptcy commences, which will save a lot of hassle later on.
Sometimes, debtors will apply to be made bankrupt in an attempt to slow the divorce down, or to make things more difficult for their spouse. In these sorts of cases, the spouse can apply to court to have the bankruptcy annulled if the debtor has hidden assets and isn’t really insolvent. This can be done even if the bankruptcy is already in place.
Divorce and Bankruptcy at the Same Time? Call or Email Us Now for Your FREE Specialist Divorce and Family Law Advice.
In our experience many people going through both divorce and bankruptcy at the same time are understandably really worried about where they stand.
We strongly recommend getting in touch with a specialist family law solicitor as soon as possible – that initial legal advice, which can sometimes be taken over the phone, may be all you need to put your mind at rest – and don’t forget, here at Bonallack and Bishop, that first phone call, and your first 30 minute appointment, are both FREE – face-to-face phone or Zoom video – the choice is yours.
What’s more, we can represent you wherever you live in England and Wales.
Going Through Both Divorce and Bankruptcy? Contact our specialist solicitors today
If you’re currently in the process of divorcing and need advice on the process, or are about to start divorce proceedings, speak to us today. We specialise in divorce law, and irrespective of the difficulties which may be foreseen in your divorce, we can guide you through the process.
Don’t suffer in silence. Find out where you stand today.
- Call one of our family team FREE on FREEPHONE 0800 1404544 or on one of our local branch numbers
- SALISBURY 01722 422300
- FORDINGBRIDGE 01425 652110
- AMESBURY 01980 622992 or
- ANDOVER 01264 364433
OR
- E-mail us using the online enquiry form below
