Dealing with bankruptcy after divorce

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Over the last few months we have seen the court have to grapple with the difficult issue of bankruptcy following divorce.

In a case (McRoberts v McRoberts) before the court in November 2012, the Judge had to consider how to treat a matrimonial order made in 2003 where, within divorce proceedings, a husband was ordered to pay a significant lump sum to his wife, in instalments.

The husband failed to keep up with the instalments and in 2006 a bankruptcy petition was presented against him by a third party and the the husband was declared bankrupt.

In September 2007, he was discharged from bankruptcy and then his former wife then entered a proof of debt within the bankruptcy, having received northing as a result of the deficit in the bankruptcy previously.

The Judge conducted a review of recent case law, which emphasised the court's discretion in such situations and the need for a balance between prejudice to both the applicant and respondent.

With the facts before him in this case, Hidyard J decided that the balance remained in favour of keeping the obligation in place and so the husband was not released form his obligation.