Bankruptcy after divorce

Despite completing divorce proceedings two decades ago, a woman now faces losing her home because of a £3,000 debt that was run up by her ex-husband in the 1980s.

After discovering that the debt “ owed to the Inland Revenue “ had risen to £73,000 over the years, Vivian has now been told she may be forced to sell the £150,000 semi in Merseyside she once shared with her husband to come up with the cash.

Mrs Avis, 52 from Kirkby has not lived with her bankrupt ex-husband since the mid-1980s but a judge has ruled that regardless of the terms of the couples divorce agreement, his creditors can demand the sale of the home they once shared to recoup what they are owed.

It is usual practice during a divorce for solicitors to strike a deal between both parties to allow one to live on in the matrimonial home. However, Lord Justice Chadwick, sitting at London's Appeal Court yesterday, ruled that such terms can be over-ridden if the husband or wife is declared bankrupt.

This is on the understanding that the interests of the bankrupt's creditors outweigh all other considerations unless the circumstances of the case are exceptional.

Martin Loxley, Family Law specialist and Solicitor at law firm Irwin Mitchell commented: This case shows quite clearly why, in a divorce, all finances should be completely tied up. Divorce should mean a clean break, ensuring these sorts of difficulties do not arise in later years.