When you file bankruptcy, a standard legal process begins depending on the type of bankruptcy you file. It starts with the appointment of a bankruptcy trustee who oversees your income as well as assets. With this, the trustee can pay the debts of the debtor accordingly.
If problems arise between the spouses regarding property, bankruptcy deals with family law property disputes in the following ways.
Bankruptcy and Family Law Amendment Act 2005
The bankruptcy and family law amendment act 2005 says that one spouse’s bankruptcy cannot stop the control of the non-bankrupt spouse to adjust the property. It is not a requisite for spouses to separate from each other for the non-bankrupt spouse to control the proceedings.
Property disputes under the court proceedings occur in the same way as applying the Family Law Act, irrespective of the one spouse being bankrupt. It means the family court has the power to handle the property settlement where the court appoints a trustee for the management of the bankrupt’s assets.
Types of Property Court Deals With:
- The property of a bankrupt that vested in the trustee issued for bankruptcy.
- The assets of non-bankrupt spouse
- The property of a bankrupt spouse that does not come under the bankruptcy trustee’s control due to exemption from the bankruptcy act, as the superannuation.
A bankrupt spouse should inform the court at the beginning of the proceedings to seek the family court’s permission so that process goes smoothly.
If you would like more information about filing bankruptcy and marital property, contact a Houston bankruptcy attorney.