Bank­ruptcy and fam­ily law

Western Suburbs Weekly - - Street Watch -

WA’S un­em­ploy­ment fig­ure has risen sharply this year, from 5.3 per cent to 6 per cent.

One of most crit­i­cally af­fected sec­tors is min­ing; over the last year, 25,000 jobs were lost across the re­sources sec­tor in West­ern Australia alone.

Many fam­i­lies af­fected by un­em­ploy­ment are strug­gling to meet their fi­nan­cial com­mit­ments and the im­pact of this upon their re­la­tion­ships, mar­riages and chil­dren can be sig­nif­i­cant. As a re­sult, we may well see an in­crease in re­la­tion­ship break­down, bank­ruptcy and par­ties find­ing them­selves in the Fam­ily Court.

Fam­ily law gen­er­ally re­quires the debts of a cou­ple to be paid from their prop­erty or as­sets when the re­la­tion­ship breaks down. How­ever, the bank­ruptcy of one mem­ber of the cou­ple changes how debts are treated.

If you are the bank­rupt spouse, all of your prop­erty (with some ex­cep­tions) is placed into the hands of the Trustee in bank­ruptcy. You will be al­lowed to keep cer­tain as­sets such as nec­es­sary house­hold goods, su­per­an­nu­a­tion, tools of trade to earn in­come (up to a value of $3650) and a car (up to a value of $7500).

The Fam­ily Court may al­low the Trustee in bank­ruptcy to be added or joined to your fam­ily law pro­ceed­ings if they are sat­is­fied that the in­ter­ests of your cred­i­tors may be af­fected by your fam­ily law pro­ceed­ings. Once the Trustee is joined as a party to your fam­ily law pro­ceed­ings, he or she steps into the shoes of the bank­rupt spouse.

The bank­rupt spouse will there­fore lose their right to make sub­mis­sions to the Court re­gard­ing the as­sets and prop­erty that has vested in the bank­ruptcy Trustee.

If you are the non-bank­rupt spouse, you need to be aware of the Bank­ruptcy and Fam­ily Law Leg­is­la­tion Amend­ment Act (BFLAA). The BFLAA gives the Fam­ily Court the power to make or­ders about prop­erty that has vested in a Trustee in bank­ruptcy. The Fam­ily Court will bal­ance your claims to mat­ri­mo­nial prop­erty against the com­pet­ing in­ter­ests of the cred­i­tors.

With Simon Creek

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