Did you know that if you are bankrupt you are not entitled to apply for a property settlement in a Family Court, or usually, even make submissions to the Court about what property settlement Orders should be made?

If your marriage or de facto relationship has broken down and you are bankrupt, the Bankruptcy Trustee is entitled to become a party to the family law case and seek Orders in relation to the assets of your relationship.

A recent family law case of Bethke & Bethke confirmed that the Bankruptcy Trustee must be joined to a family law property settlement case where:

1. An application for property settlement has been filed in a Family Court;
2. Once the parties to the relationship is bankrupt;
3. The Bankruptcy Trustee makes an application to be joined to the proceedings; and
4. The Court is satisfied that the interests of the creditor/s of the bankrupt spouse may be affected by a property settlement Order.

The case also confirmed that the Family Law Act does not require any consideration of the best interests of the creditors of the bankrupt spouse or any consideration of whether joining the Bankruptcy Trustee is just and equitable in the case.

If you are considering bankruptcy as a way of dealing with the debt arising out of your marriage, and your relationship has broken down, you should consider your position very carefully and seek legal advice.

Would you like to speak to a specialist in Family Law? Call us today – 02 6372 3388