The bankruptcy of a spouse can have a catastrophic effect upon the ancillary relief claims of the other spouse. In this article, it is assumed that it is the husband who is made the subject of a bankruptcy order, and we examine the effect upon the wife’s ancillary relief claim. However, the same would apply if it were the wife’s bankruptcy and the husband was seeking ancillary relief.
Where there is a possibility that a husband could be made bankrupt, the advice to the wife is to try to reach an early settlement of ancillary relief proceedings and to effect any transfer of property before bankruptcy. Even if the transfer has not been put into place by the time the husband is made bankrupt, as long as decree absolute has been pronounced and the time limit under the Order for the husband to transfer the property has expired, the property will belong to the wife. However, if the bankruptcy petition against the husband had been issued before the ancillary relief order had been made then under Section 284 of the Insolvency Act 1986, any disposition by a person later made bankrupt made after the issue of a bankruptcy petition is void.
The wife is therefore safe if an ancillary relief order has been made and a transfer of the property pursuant to a court order has taken effect. The exception to this would be if there was any collusion, fraud or material non-disclosure by the wife. In such cases, a trustee in bankruptcy may be entitled to have the ancillary relief order and transfer set aside. Any settlement must therefore be a genuine resolution of ancillary relief claims.
What would happen if the ancillary relief order provided for the former matrimonial home to remain in joint names but subject to a later sale? This situation could arise where it had been agreed or the wife had been allowed to remain in the matrimonial home for as long as she liked unless she re-married. Unfortunately for the wife in this situation, a trustee in bankruptcy can apply to Court for an order that the property be sold unless there are exceptional circumstances. If the home had been transferred into the wife’s sole name with the charge back in the husband’s favour the trustee would struggle to enforce this charge before the events triggering sale as specified in the charge.
Where the trustee has an interest in a property which used to be the matrimonial home, the trustee has 3 years from the date of the bankruptcy order to take steps to realize his interest. If a trustee doesn’t take steps within this time frame then his interest reverts back to the bankrupt.
For further information, contact Cohen Cramer Solicitors family law department here or for further information, contact Cohen Cramer Solicitors on 0113 244 0597 or visit www.cohencramer.co.uk
