You got your divorce award. Will you have to give it back?

In a landmark case, divorcees could find that creditors try to claim their assets if their ex-partner goes bankrupt. By Paula Hawkins

If you think divorce signals the end of your financial relationship with your spouse, think again. Depending on the outcome of a current Court of Appeal case, ex-partners may find that assets awarded to them during a divorce could be taken away if their former spouse goes bankrupt within five years of the split.

Wendy Haines was awarded the proceeds of her matrimonial home in a divorce settlement in 2003. When her ex-husband went bankrupt two years later, the bankruptcy trustees sought to set aside the divorce order and recover the money from the sale of the home. Their initial attempt failed, but in May this year a court ruled Mrs Haines could be forced to hand over the assets awarded to her. She appealed and is now awaiting a decision, which should be made before the new year.

If Ms Haines loses, it could open the way for other divorcees to lose assets. "There is a period of vulnerability," explains Ann Thomas, a solicitor at Boodle Hatfield. "If the individual is insolvent at the time a settlement is made, there is a five-year period in which assets are at risk. If not, the period of vulnerability is shortened to two years."

Ms Thomas says the case could lead to situations in which disgruntled spouses deliberately incur debts in order to overturn an award. "There is a chance that a particularly malicious husband who has had to give part or all of the family home to his wife could live a reckless life which would lead to bankruptcy. The ex-spouse could then be pursued by the creditors."

But she adds that even if Ms Haines loses, it would not necessarily put all recent divorcees at risk. "In this case, the bankruptcy was foreseeable at the time of the divorce. I think this case belongs in a different bracket from one in which there is no prospective disaster looming. I think it is unlikely we will see that a spouse is vulnerable every time there is a bankruptcy within five years."

The result of the case will coincide with what family lawyers call divorce season. "There are always a very high number of petitions in the new year. People are thinking about starting afresh," says Ms Thomas.

If you are contemplating a split, she has some advice: choose a solicitor who is a member of Resolution an organisation set up to promote a non-confrontational approach to divorce.

Also, do not expect everything to be divided equally. There a number of factors at play, such as what assets each party brought to the marriage, whether there are children, and the needs of the divorcing parties. What's more, conduct during the marriage has little influence on the nature of the financial settlement. In other words, even if one spouse is unfaithful or violent, their actions do not automatically translate into a more beneficial settlement for the other spouse.

Divorcing women, in particular, are urged to consider future pension provision.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

    Reach Volunteering: Trustees with Finance, Fundraising and IT skills

    Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent