Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Bankruptcy definition

What does Bankruptcy mean? Bankruptcy is the formal insolvency process for individuals who cannot pay their debts. It halts most enforcement, vests the bankrupt’s estate in a trustee, and realises assets and surplus income for creditors until discharge. In England and Wales, under the Insolvency Act 1986, a debtor applies online to the Adjudicator for a bankruptcy order; creditors petition the court. The Official Receiver acts as trustee unless an insolvency practitioner is appointed. Discharge is usually after 12 months; income payment orders/agreements can run up to three years; bankruptcy restrictions orders may extend restrictions. Scotland uses sequestration under the Bankruptcy (Scotland)...

Concurrent Bankruptcy and Divorce: Timing, Effect on Property Adjustment Orders, and Routes to Challenge (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

The impact that bankruptcy and divorce proceedings have on one another

Decisions in both the bankruptcy and family courts have repeatedly grappled with how each process affects the other. It is, regrettably, frequent for a bankruptcy to be underway at the very time a marriage is ending, and running both together often generates friction: the competing pull of creditors’ claims against the needs of the bankrupt’s spouse and any dependants. The family court’s task is to craft a property adjustment order, apportioning the parties’ assets with an eye to their future requirements, including provision for children and other dependants. By contrast, the bankruptcy court is concerned with distributing the bankrupt spouse’s estate strictly in line with the statutory insolvency scheme. That clash of objectives must be evaluated with particular care, and, above all, the chronology—when the bankruptcy commenced as against when any property adjustment order was made—tends to be the decisive factor. This Practice Note considers the successive phases of a bankruptcy and explains how each stage may bear upon the progress and outcome of divorce proceedings...

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Web page updated on 21/05/2026

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