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Bankruptcy Not Enough to Avoid Debt to Ex-Wife

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

A man who was made bankrupt has failed in an attempt to persuade the court that, following his discharge from bankruptcy, he should be relieved of the duty to make payments due to his ex-wife. He had been ordered to pay her the sum of £450,000 following a 2003 court order.

The man was ordered to pay the sum in instalments over six years. He did not keep up the payments and a bankruptcy order was made against him in September 2006. His bankruptcy was discharged in September 2007.

He applied to the court to relieve him of the obligation to pay the balance due to his ex-wife. Such debts are not ‘provable debts’ and as such do not form part of the debts dealt with in a bankruptcy. In such circumstances, the court has jurisdiction to release the debt ‘entirely or conditionally’, at its discretion.

In spite of much argument on both sides, the judge considered the key issue to be ‘whether there is so little prospect of the outstanding lump sum being paid, even in part, that its release would not substantively prejudice the Respondent but would materially advantage the Applicant in a realistic effort to build a viable financial future for himself and his dependants’.

The man’s tax returns showed that he received only a small salary, but also disclosed more than £100,000 a year described as ‘expenses, travel and subsistence’. Mention was made of stamps in his passport showing visits to countries in which he had no business activities, including a trip to the Maldives over Christmas.

His application was dismissed, meaning the balance of the sum as yet unpaid following the 2003 order remains payable to his ex-wife.

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