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Debts and Divorce

11th September 2014

Credit cards, loans, overdrafts family debts come in a variety and increasingly diverse forms- who had heard of Pay Day loans ten years ago? But what happens to these when married couples split? Increasingly personal bankruptcy is looked at as a debt repayment plan by some, but what if this coincides with a separation and or divorce.

Family courts may look at debts in one person’s name as effectively “matrimonial”, if it can be shown that the family benefitted. Boys toys will not qualify, but normal family expenditure may and if resources allow, will be taken into account. So it matters less in whose name a debt is, more what the money was spent on.

Bankrupts beware however, their families even more so. The courts continue to/have always taken a firm line preserving creditor’s interests. The same applies to the enforcement of court orders to creditors. A recent case highlighted that, notwithstanding that a party had registered existing rights to occupy a property, the commercial interest of creditors came first. Here a mother and children were allowed to remain in a property for a year after which the father’s creditors would be allowed to sell the property and repay debts. In a rising housing market this approach may be seen more often.

The lesson here is simple; read what you sign and look at the potential consequences and don’t leave the finances entirely to your spouse to deal with.

DIY is bad for you!

Many people faced with a family law problem are tempted to do it themselves. Others have little choice due to their financial circumstances. A former senior family Judge from South Wales recently lamented the rise of parents representing themselves in court. It seems this leads to delay, greater tension and cases that could settle, not being resolved.

The consequences, especially in cases involving children, will be damaging and may leave a permanent scar.

While the Ministry of Justice said it favours mediation as “quicker, cheaper and less stressful” than court, it is not always appropriate due to the nature of the relationship and tensions between parties.

The comments highlight the important role that experienced family solicitors play in resolving cases, regardless of the financial circumstances of the parties.

Legal costs are never welcome, but the absence of experienced family lawyers in such situations, “costs” in ways which are harder to measure

By Jim Richards, Family Law

Family Law
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