Bankruptcy occurs when an individual’s debts exceed their assets or ability to pay. Bankruptcy can be filed voluntarily by the individual or involuntarily, by the debtor’s unpaid creditors.
Originally, the bankrupt’s spouse was not given any special treatment upon bankruptcy; they were treated the same as all other unsecured creditors. However, amendments to legislation in the form of the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth) have meant that there must be an attempt to balance the interest of the non-bankrupt spouse and unsecure creditors.
If property transactions are made in anticipation of a declaration of bankruptcy, or to prevent or avoid creditors from obtaining property, then such transactions are deemed void. This is a similar concept as that in a trust situation.
How can Prime Lawyers help you?
Property settlements can be very complex, especially when third parties become involved as is the case with bankruptcy. At Prime Lawyers, we have a number of family lawyers who are experienced in division of property and declaration of assets, and will do all in their power to ensure that you receive all that you are entitled to despite the situation of your bankrupt spouse.