Thursday, 21 June 2007

Bankruptcy concern for divorcees

Shropshire couples should beware their divorce payouts could be at risk if their former partner is declared bankrupt.

The warning comes from Nadia Davis, who leads the Family Team at Martin-Kaye Solicitors, in Euston Way, Telford.

“Even when the financial deal has been agreed as part of the divorce proceedings, trustees appointed to handle the bankruptcy have the power to try to get their hands on the divorce settlement to pay off creditors.

“This means that just when a spouse feels everything has been sorted out, and they are financially in a secure position to face the future, their previous partner’s bankruptcy could come back to haunt them.”

Nadia said what was even worse, was that the settlement could be at risk for up to five years after the divorce is finalised.

“A case heard by the High Court did initially offer some hope to people who found themselves in this situation.

“The husband declared himself bankrupt, and his trustees tried to recover the assets which had been signed over to his former wife, in order to pay off his creditors.

“But a district judge ruled she should be allowed to keep the settlement she received.
“However, the trustees launched an appeal, and the High Court has now overturned the initial decision, which means the wife stands to lose the money and assets she received at the time of the divorce.

“Unless the wife takes her case to the Court of Appeal, the law will remain as it stands, and many wives will remain vulnerable to their ex-husband’s creditors in the future.
“In today’s climate of ever-increasing debt, it’s imperative that couples are fully aware of the risks involved when they reach a settlement in their divorce – it may not always be the closure they were hoping for.”