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Family Law – The Competing Issues of Bankruptcy and Family Law

Family law property disputes or spousal support proceedings can be more complicated if one partner fails or proposes bankruptcy. In these cases, a direct dispute occurs between a trustee ‘s conflicting bankruptcy interests and the separate non-bankrupt spouse in deciding how property will be divided among the parties.Do you want to learn more? try this web-site 

Currently, disputes between bankrupt estate trustees and the divorced spouse can be resolved by the Family Court, which is empowered to make property transfer decisions even though the property is in the hands of the trustee in bankruptcy.

Where family law proceedings have begun, a bankruptcy trustee may usually seek to enter the proceedings as a party if the Family Court is convinced that any property decisions that may be rendered that impact the interest of creditors.

When deciding how property matters will be resolved in the sense of bankruptcy, the Court must observe the ordinary rules governing the sharing of property between partners, and also consider the implications of a possible judgment on the creditor’s ability to recover his debt from the bankrupt partner. The effects of an order on creditors are given particular attention when determining whether adjustments should be made in accordance with the factors set out in section 75(2) of the Family Law Act 1975 (Cth), i.e. adjustments of the interest in property taking into account factors including the health, age, earning capacity of the parties and whether either party cares for children of the relationship under the aforementioned If the interests of the borrower are given greater priority than those of the non-bankrupt partner, then the Court may find it unreasonable to make any further changes to the property division on the basis of these factors under section 75(2). Nevertheless, it is necessary to remember here that the balance of concern must be in order to avoid placing an injustice and suffering on the partner who is not bankrupt.

However, if a non-bankrupt spouse has gained significant gain from the bankrupt spouse’s actions, the Court may assign some liability to that spouse although there may have been little influence over the actions of the bankrupt. This may impact determinations of contributions between the respective spouses to the asset pool.