Obviously, one spouse may use every ploy at their disposal to defeat the other spouse’s financial claim against them. One such ploy is to make themselves bankrupt, in order to put their assets out of the reach of the other spouse.
But is there anything you can do if your spouse uses bankruptcy to defeat your claim?
Before answering that question we need to look briefly at how bankruptcy can affect a divorce settlement.
When a divorcing spouse is made bankrupt a trustee in bankruptcy will be appointed and all of the spouse’s assets will pass to the trustee, whose job is then to pay the spouse’s creditors.
Accordingly, the spouse will have no assets available for the divorce settlement, at least for the time being, and the court will not be able to make an order transferring the bankrupt spouse’s assets to the other spouse.
So can you do anything about it if your spouse makes themselves bankrupt?
The answer depends upon whether your spouse was genuinely bankrupt. If they were not then the court can annul the bankruptcy.
Therefore, if you believe your spouse was not genuinely bankrupt and only made themselves bankrupt to try to defeat your claim you can apply to the court to have the bankruptcy annulled.
To have the court annul the bankruptcy you will have to prove that at the time the bankruptcy order was made it ought not to have been made, or that the bankruptcy debts and the expenses of the bankruptcy have all, since the making of the order, been either paid or secured for to the satisfaction of the court.
Note that your spouse’s suspect reasons for making themselves bankrupt will not justify an annulment if they really were insolvent at the time of the bankruptcy.
It should also be noted that if you make an application to annul a bankruptcy and it fails then you could be liable to pay the costs of the trustee in bankruptcy. An annulment application should only therefore be made after taking expert legal advice.
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