Can divorcing spouse sell home to pay gambling debt first?

Many couples break up over debts, but such disputes will not just end after the split as money woes can continue to dog them, as one couple here found out.

In an unusual move, a woman who had filed for divorce sought a court order to stop her husband from selling their matrimonial home to settle his investment loss of $480,000, as she was worried about being left with nothing.

This happened before the couple had the chance to go through the formal exercise of splitting their total assets, after their marriage was dissolved in February 2024.

The man wanted to sell the home, which was in his name, to settle debts racked up from his high-risk investment activities on a trading platform.

But his wife wanted to stop the sale of the condominium, pointing out that the sale proceeds after paying off existing loans would come to around $350,000 – not enough to pay off all the husband’s debts. She added that he had a “gambling problem”.

High Court Judge Choo Han Teck noted that the court would not grant an injunction simply because of an allegation that one of the spouses had financial problems.

To succeed in her claim, the wife must show why the sale of the property would prejudice her, such as how it would deplete the matrimonial assets so much that she would not be able to receive her rightful share.

Right to start anew

Divorces cannot start and end in quick succession because there are often many matters to sort out. Given the time lag between the start of such actions and the final judgment, both sides often need to deal with their own financial issues, such as buying new homes or settling debts, as they seek to begin a new life.

So not every decision to dispose of a matrimonial asset by one spouse must be halted because a balance must be struck in fairness for both spouses.

In determining whether a disposal of asset would be unfair to the other spouse, the court would take into account whether there are adequate matrimonial assets left that can still satisfy the likely shares that the spouses would get from the split.

“Hence, in a case where there is only one matrimonial asset of substantial value and a husband wishes to dispose of it, a court should allow a wife’s application for an injunction because there are no adequate remaining assets to satisfy a likely award in her favour in those circumstances,” Justice Choo noted.

But in this case, the condominium was not the couple’s only asset. The husband argued that the estimated value of the matrimonial pool was around $2.3 million and that the sale proceeds of $350,000 for the condominium would be just 15 per cent of that.

As the wife did not produce any proof that he would not be entitled to get even a 15 per cent share of the joint assets, he said he should not be prevented from selling the property to pay his debt.

His wife claimed that their total assets were not worth that much but could not provide even a rough estimate of the value to support her case.

As she failed to provide sufficient proof to support her case of halting the sale, the judge disallowed her application because the husband’s case did not appear to be unreasonable on the basis of the declared assets generally.

After all, even if the court would eventually grant the wife’s claim of an 80 per cent share of the total assets, her husband would still be entitled to 20 per cent of the matrimonial pool. As the condo sale would take away only about 15 per cent of the total, there would still be enough to make up her share.

This case is a good reminder that you should always spend or invest within your means so that you will not need to worry about borrowing too much. If you go overboard, there is a high price of being homeless if you need to sell your home just to pay your debt.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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