Equity Release – Your Top 10 Questions Answered In our Residential Conveyancing department we are often asked by our clients to give them advice when they are considering Equity Release Schemes. In this Blog, Arlie Asbury, one of our Licensed...
Apparently Wealthy Divorcees on Brink of Bankruptcy
In an age of easy credit the appearance of wealth is often illusory and, in one striking case, a couple who enjoyed a six-figure income and lived in a house worth almost £2.5 million were pushed to the point of bankruptcy by the husband’s reckless spending and the costs of their divorce.
The husband earned £248,000 a year before tax and the couple had two children at leading private schools. However, they had ploughed everything they had into buying and refurbishing their home. The husband’s elderly mother, who expected to live in an annexe to the house, had put more than £500,000 into the project.
Since the couple’s separation, they had spent over £300,000 on legal costs. The husband also owed substantial sums to the tax authorities, friends and his sister. The wife accused him of squirreling away more than £150,000 but he said that he had blown most of that on holidays and other luxuries. The reality was that, even after their house was sold, the couple would have not much more than £100,000 between them.
The High Court was critical of the husband for his irresponsible spending but also of the wife for sticking her head in the sand like an ostrich and refusing to recognise the financial crisis which the family faced. In those circumstances, the Court found that it was necessary to impose financial sanity on the couple’s affairs in order to stave off insolvency.
Their divorce had yet to be finalised, but the Court ordered the wife to give up vacant possession of the former matrimonial home to enable its speedy sale. The husband’s salary would be just sufficient to rent two flats, one for himself and the other for his wife and children, and he would also be able, narrowly, to pay school fees and reasonable maintenance to his family.