It is common for the stress of prolonged financial problems to cause relationship breakdown. Also, relationship breakdown can cause severe financial problems.
The Bankruptcy Act protects your essential assets to give you a foundation to go forward. Protected assets include superannuation you have accumulated over the years, household furniture and effects, and vehicles and tools of trade up to set amounts. Further, once you become bankrupt, you can save in your bank account and that money is protected for you.
If you are bankrupt and enter Family Law proceedings, the Family Law proceedings will cause all your assets to go on the table, including those assets that are protected by your bankruptcy.
So, in the Family Law proceedings there will be three categories of assets:
- Your assets that vest in your bankrupt estate. eg your equity in your family home.
- Your assets that are protected and do not vest in your bankrupt estate. eg your superannuation.
- Your ex partner’s assets.
Where there is both bankruptcy and family law happening, the family law judge will take account of the needs and circumstances of:
- The creditors of your bankrupt estate,
- Your ex-partner,
- Children from the relationship.
In short this may result in you losing some of the assets that bankruptcy protects for you. For example, the Court might order that your ex-partner is to have the household furniture or a proportion of your superannuation.
To assist you to understand how bankruptcy and family law work we have produced several articles which are listed to the right. We recommend you start with the first article, ‘An Introduction to Bankruptcy and Family Law’ and then read the other articles that are relevant to your circumstances.