Break­ing it down on bank­ruptcy

Western Suburbs Weekly - - Business - LAW ALERT with Si­mon Creek Si­

WHEN a re­la­tion­ship breaks down, the law gen­er­ally re­quires the cou­ple’s debts to be paid from their prop­erty or as­sets.

How­ever, things quickly be­come com­pli­cated if one of the spouses be­comes bank­rupt.

If you are the bank­rupt spouse, most of your prop­erty will be placed into the hands of what is called the “trustee in bank­ruptcy”.

A trustee in bank­ruptcy takes re­spon­si­bil­ity for the fi­nan­cial af­fairs of a bank­rupt per­son.

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) but oth­er­wise you can ex­pect the trustee to liq­ui­date any as­sets you have to pay your cred­i­tors.

The Fam­ily Court may al­low the trustee in bank­ruptcy to be joined to your fam­ily law pro­ceed­ings if the Court is sat­is­fied that the in­ter­ests of your cred­i­tors may be af­fected by the pro­ceed­ings.

Once the trustee in bank­ruptcy is joined as a party in your fam­ily law pro­ceed­ings, he or she ef­fec­tively ‘steps into the shoes’ of the bank­rupt spouse.

This means the bank­rupt spouse will lose their right to make sub­mis­sions to the Court re­gard­ing the as­sets and prop­erty that are now in the hands of the trustee in bank­ruptcy.

If you are the non-bank­rupt spouse, you need to be aware that the Fam­ily Court may also make or­ders about prop­erty that is now in the hands of the trustee.

When mak­ing such or­ders, the Fam­ily Court will bal­ance your claims to mat­ri­mo­nial prop­erty as a non-bank­rupt spouse against the com­pet­ing in­ter­ests of the cred­i­tors of the bank­rupt spouse. This is a com­plex area of law. Ei­ther way, seek early le­gal ad­vice.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.