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Family financial orders vs bankruptcy.

  • maggie
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21 May 12 #332100 by maggie
Topic started by maggie
This might come in useful if your ex goes bankrupt?
www.familylawweek.co.uk/site.aspx?i=ed97961

" When the matter later came before Judge Pelling QC on appeal, he agreed with the Registrar''s assertion regarding the lack of authority concerning the court''s discretion to order a release from a debt under section 281(5). As a result of this lack of statutory guidance and lack of authority specifically on point, it was held that the court had an unfettered discretion to discharge debts under this provision. Judge Pelling QC did however stress the ''default position'' that family orders had to survive the discharge of a bankrupt and remain subject to an order of the court requiring the discharge of the debt; bankruptcy procedure should not be used as a mechanism under which obligations conferred by family orders were avoided, there is a distinction between family and commercial liabilities."

  • LittleMrMike
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22 May 12 #332147 by LittleMrMike
Reply from LittleMrMike
Thanks for this, Maggie and for keeping us all up to date !
I suppose, if you look at it, bankruptcy is a way in which one can legally be released from a debt.
A family Court has the power to order re-allocation of debts as between divorcing spouses, though this does not, of itself, affect the liability to the lender.
If the Court is satisfied that bankruptcy is a device to prejudice the position of a divorcing spouse, then the Court has, as the case makes clear, a discretion to refuse to discharge it.
LMM

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22 May 12 #332155 by jonathancj
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Actually, Mike, it''s even tougher than that. The default position is no discharge. The bankrupt has to apply for discharge from matrimonial orders and the case Maggie refers to is the very first time anyone has tried it - unsuccessfully as it happens. The Court said there would have to be some exceptional reason to grant the discharge if the debt arose from a family law order.

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22 May 12 #332159 by LittleMrMike
Reply from LittleMrMike
Thanks for the clarification, Jonathan. Yes, that makes a lot of sense.

LMM

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