CAN A SPOUSE LIQUIDATE A DEBT OF A BANKRUPT?

When considering a case on challenging the repayment of the common debt of the spouses by the debtor's wife, the courts could not come to a common opinion, and the manager insisted on recognizing the transaction as invalid. But the Supreme Court put an end to the issue, having explained its position quite simply.

Initially, the debt arose from a loan agreement in which the spouses acted as co-borrowers, and their apartment was pledged to the bank.

Subsequently, the husband was declared insolvent, and the court included his debt under the contract into the register of creditors’ claims. Then the wife paid off the remaining amount of the debt, which led to the removal of the encumbrance from the real estate and, in fact, the satisfaction of the claims of one of the bankrupt creditors.

The manager saw this as an advantage of the bank over other participants in the process and tried to recognize the payment as invalid.

The court of the first instance dismissed the claim, having found no grounds for it, but the appeal and cassation considered the actions unlawful and sided with the bankruptcy manager.

The Supreme Court put everything in its place, having indicated that in such cases, payments made either by the debtor himself or at his expense can be recognized as invalid.

In the situation under consideration, the payment of the debt was made by the wife, who, following her explanations, took money for this from the funds which were given to her personally by her parents.

According to the norms enshrined in the Family Code, such money is the personal property of the spouse, which means that there is no share of her bankrupt husband in it.

Consequently, the circumstances of the case do not fall under the criteria for recognizing the transaction as invalid (judgement No. 308-ES20-20893 dated March 18, 2021).