Bankruptcy And The Family Home

It has always been assumed that, if an application was made to the Court for financial settlement within divorce proceedings, and the Judge ordered a transfer of the matrimonial home, the applicant would be safe from any later claim by a trustee in bankruptcy of the transferring party.

The decision in a recent High Court case (Hill and Bangham -v- Haines) suggests that this may no longer be the case.

The divorce and bankruptcy courts have often found themselves in conflict over the transfer of property from one spouse to another, especially if, as a result, one spouse has become entitled to more than fifty per cent of the joint assets.

In the past, a trustee in bankruptcy could seek to overturn an agreed Order, made within divorce proceedings, but a decision made by a judge at trial was considered to be unassailable

The High Court has now allowed an Order, made by a trial judge within divorce proceedings, to be overturned, this on the basis that no consideration (value) was given to the transferor husband.

It is uncertain at this stage whether the transferee wife will appeal against the decision.