You can be made Bankrupt in two ways. 

1.    A creditor, (someone to whom you owe money, has either issued a statutory demand or obtained a Judgment Debt against you,) can present a Petition to the Court for your Bankruptcy.

2.    You can present your own Petition if you are unable to pay your debts.

Sometimes an Individual Voluntary Arrangement may be an alternative to this.

If you are adjudged Bankrupt then your assets are taken over by the Official Receiver and a Trustee in Bankruptcy is appointed.

The Trustee has to collect in all monies owed to you.  These obviously fall into several categories. 

1.    The Family Home

If the Family home is in your sole name or it is jointly owned with your spouse or civil partner then within 3 years of the date of the Bankruptcy the Trustee must apply for possession of and an order for sale of the house.

If there is a negative equity in the house then there is little point in the Trustee applying for possession of the property.

Your spouse or civil partner will then need to make a claim for what they say is their interest in the property and whether that is sufficient to delay or avoid the Trustee selling the property.  Unfortunately these claims are dealt with in the Bankruptcy Court not in the Family Court where Judges can be rather less understanding or flexible than Judges in a Family Court.

If, therefore, your relationship is in some difficulty and your partner may be facing Bankruptcy that may be a reason to bring forward your financial claims within family proceedings, before Bankruptcy proceedings are commenced. In practice, where the Bankrupt has a spouse or a civil partner or a legal co-owner of the property the Trustee in Bankruptcy may be open to negotiation as to how much they want for the Bankrupts interest in the property in order to avoid lengthy and costly Court proceedings.  This can be an opportunity to secure the family home at a discounted price.

2.    Money in the Bankrupts name

Even if partners have divided the running of the household and general finances between them but have not had a joint account then anything that is in the Bankrupts name will be taken by the Trustee in Bankruptcy.

3.    Debts in the Bankrupts name

Even though a debt or a loan may have been for mutual benefit of partners or for the family use generally, if it is in the Bankrupt’s name it will form part of the Bankruptcy and the other partner will not have to make any contribution towards that liability unless they have Undertaken to do so.

If there are substantial debts, divided in various way between partners in a relationship if one party declares themselves Bankrupt, often the other one is forced to do so in order to protect themselves from being held liable for joint accounts.

If these or any other issues relating to family breakdown are problems for you please contact us on 01423 858582 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it