The property settlement that is related to family law for protection of your better half maybe complicated in case one partner is bankrupt or thinking to filefor bankruptcy. Under these circumstances, a quarrel may arisebetween the interests of a trustee in bankruptcy and the divided non-bankrupt partner in knowing as to how the property may be divided among both the parties. The quarrels that take place between the separated partner and the trustees of bankrupt estates may be solved by the Family Court who is authorized to make orders about the distribution of property even if the property is in the trustee in bankruptcy’s custody. While filing for bankruptcy, you may file chapter 13 bankruptcy where you will restructure your assets sothat you may be able to pay them off easily. When you decide to file for bankruptcy, your difficult financial condition will certainly have an impact on others who are around you particularly your own family. The situation may become more complicated if the couple lives separately and want to arrange for a property settlement when one partner is already a bankrupt. The relationship between family law and bankruptcy seems to be quite confusing. It involves the problem of the claims of the creditors with the non-bankrupt spouse and their children. As such, the family law proceedings may have a significant impact on the matrimonial property that is available to the creditors. A trustee in bankruptcy may apply as a party to the happenings when the family law proceedings have begun if the Court feels satisfied that the interest of the creditors may get affected by the property orders that may take place. The Family Court needs to follow the common principles that govern distributing the property between the couple and also have considered the effects of an order on the capability of the creditors to recover their debts from the bankrupt partner. The effects that the order has on the creditors is given special attention on knowing if the adjustments should be made in accordance with section 75(2) factors of the Family Law Act 1975 (Cth). This means that the adjustments of property interest depends on the factors such as earning capacity of the parties, health, age and whether the partner needs to take care for the children who is under 18 years old. In case the interests ofthe creditor’s are given more priority than the interest of the partner who is non-bankrupt, the Family Court may not consider it to be suitable to make further adjustments on dividing your property depending on the section 75(2) factors. It is important on your part to know that the balance of consideration should be towards avoiding the burden of injustice and hardship on the non-bankrupt partner. If a non-bankrupt partner has obtained significant profit from the actions of his spouse who is bankrupt, the Court may show some kind of responsibility to the spouse even though there may be less control in terms of the actions of the bankrupt. This may have an impact on determining the contributions that the couple would make on their assets. The couple may decide to enter into Binding Financial Agreements to sort out their financial matters. As such, it is important to know that these agreements may be kept at a side by the courts in case either of the spouse enters into an agreement paying no attention of the creditor’s interests or with the reason of defeating their interests.