My spouse is in financial difficulties and we co-own the family home together. How will I be affected if they are made bankrupt?

Cases like this can be very challenging as the family court will look to meet the needs of the parties and any dependants, but the bankruptcy court’s duty is to the bankrupt person’s creditors. 

Much depends here on timing specifically the timing of the making of the order in the family court that dealt with the family home. 

If that order is made either by the presentation of an agreement which the courts approve or by the court in contested court proceedings before the bankruptcy petition is presented then it should bind the trustee in bankruptcy in most circumstances. 

If however the order is made after the spouse has been made bankrupt their assets will have already vested in the trustee of bankruptcy.  Any order would then be void against the trustee who could apply to set it aside.  

If the order is made after the bankruptcy petition has been presented, but before the person is officially made bankrupt then the financial order will still be void.  The non-bankrupt spouse could potentially apply to the bankruptcy court asking for an order to validate their financial order, but the prospects of success are not good. 

The individuals who stand to lose out to the greatest extent here would be those non-bankrupt spouses who would have quite legitimately expected to receive more than 50% of the equity in the family home for example as the main carer of dependent children.  It is particularly important to obtain advice regarding the financial aspects of the divorce at an early stage if your spouse is in financial difficulties. 

If you require any further assistance, or wish to book in for an initial consultation to discuss your situation, our family solicitors are based in Wolverhampton, Cradley Heath and Sutton Coldfield serve clients across the West Midlands. For all new enquiries, please call 01902 328 365 or complete our online enquiry form and a member of our team will respond.