Will the Impacts of Coronavirus Affect My Divorce Financial Settlement?
Coronavirus has had an incomparable impact on almost every aspect of our lives, with many charities reporting that lockdown restrictions have put a huge strain on relationships and finances.
Couples, families and businesses have faced significant changes over the last 18 months and if you are going through the process of separation or divorce, your financial settlement could be affected by coronavirus. In this article we look at some of the key factors which may affect financial settlement in light of coronavirus and answer common questions divorcing couples may have.
My financial circumstances have changed as a result of coronavirus, how will this affect my financial settlement?
If you are in the process of negotiating a financial settlement, either through your solicitors or via court proceedings, both parties have a duty to provide full financial disclosure.
If you have previously disclosed a much stronger financial position, your disclosure may need to be reviewed. This review is important as a sudden change in income or financial circumstances may affect the arrangements for financial settlement. For example, if your income has dropped dramatically, you may no longer be able to take on the mortgage you previously would have, and you will be unable to ‘buy out’ your former partner from a shared property.
Throughout the pandemic, it has been common for parties to look at reducing maintenance payments to a former partner where they have been placed on furlough and as a result, have received a lower income. While many people have spent some time on furlough, the government scheme is coming to an end. You will need to be clear about when any reduction in maintenance payments will come to an end, and you must take into account the industry you work in and when a normal income is likely to return.
If you have already received a financial order, this order may have been made on the basis of your financial position prior to the coronavirus outbreak. As a result, arrangements made may no longer be viable and the order may need to be reconsidered. For many people, income has disappeared overnight and they may simply no longer be able to pay spousal maintenance or to meet the timetable for the transfer of assets.
If your spouse has not yet been declared bankrupt, you should do all you can to agree a financial settlement or make an application to the court before the bankruptcy process begins. Once bankruptcy proceedings begin, almost all of the assets owned by the person to be made bankrupt are owned by the trustee in bankruptcy.
One of the challenges with such cases is that during financial remedy proceedings in divorce, the court has the power to redistribute income and assets and income between spouses in accordance with their needs, as well as what the court considers to be “fair”. Such redistribution can often lead to conflict between your interests and the interests of the trustee in bankruptcy. A typical example is where your home is owned jointly by you and your spouse. In these circumstances, the property cannot be transferred solely into your name without the consent of the trustee in bankruptcy.
As a result, it is essential to act as quickly as possible and seek specialist legal advice where you believe your spouse may be made bankrupt.
If the bankruptcy has already taken place, the process can be complex. You must seek legal advice on your specific circumstances. One such complication is that where your spouse is declared bankrupt, money that has already been paid to you may not necessarily be protected. The trustee in bankruptcy can ask that any court order be recalled at any time up to five years from the date the order was granted. When such a recall is granted, the trustee in bankruptcy may be able to recover money paid to you by your former spouse. We can help you to protect your financial position.
Our top-rated solicitors are experienced in international divorce financial settlement cases with complex proceedings and international elements. Call our UK specialist solicitors to discuss your case today on 0330 107 0107 or request a call back.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
Published by: Iwona Durlak
IMD Solicitors LLP