A divorced woman faces being forced from her home of more than 20 years after a Court of Appeal ruling confirming that deals struck by former wives when they split with their husbands are not safe from creditors.

The ruling in the case of Vivienne Avis, from Kirkby, Merseyside, confirms a High Court ruling in May in another case that divorce deals can be overridden if the partner moving out becomes bankrupt.

Until recently, divorced wives have won rights to stay on in the marital home until their children grow up, or either they or the former husband remarries, or if they start to cohabit, or if one or the other dies. But yesterday’s ruling makes clear that, irrespective of the deal, a property can be sold over the head of the partner who has stayed there, to pay off the bankrupt partner’s debts.

One of the country’s senior judges, Lord Justice John Chadwick, said: “The interests of the bankrupt’s creditors outweigh all other considerations unless the circumstances of the case are exceptional.”

Michael Pratt, solicitor for Mrs Avis, said: “My client is obviously devastated by this decision. We did not accept that the bankruptcy trustees can force her to sell, because under the divorce settlement she had a right to stay in the house for the rest of her life. But we have lost on that point.”

However, he said that because the trustees had taken 18 years to pursue her it was a factor that he would raise when the case came back to the High Court to decide if it fell within “exceptional” circumstances.

Mrs Avis has stayed at the Kirkby house that she shared with her former husband, Edmund, since matrimonial proceedings in 1985. Mr Avis became bankrupt in 1989. His trustee-in-bankruptcy, Charles Turner, is seeking a court order forcing a sale of the property to recoup his one-third share.

Mrs Avis, who would be entitled to the remaining two thirds of the sale proceeds, sought a Court of Appeal ruling that, under the agreement she reached with Mr Avis in 1985, Mr Turner was powerless to force a sale until she either remarried or began cohabiting with another man.

But Lord Justice Chadwick, sitting with Lords Justices Ward and May, backed an earlier ruling of the High Court that the agreement between the Avises did not override the need to pay the bankrupt Mr Avis’s creditors.

A further hearing will be required to decide whether the circumstances of the case truly are exceptional, and do entitle Mrs Avis’s interest to override those of her husband’s creditors.

In an attempt to block Mr Turner’s application, Mrs Avis argued at the High Court in May 2006 that no order for sale could be made because none of the events specified in the 1985 agreement had occurred. But Judge Pelling, QC, ruled that the trust created in the agreement “must yield to the interests of the bankrupt’s creditors, save in exceptional circumstances”. Mrs Avis appealed, but yesterday the Appeal Court again found against her. “I would hold that the judge was right to make the order that he did,” Lord Justice Chadwick said.

A similar case in May made clear that thousands of divorcees risk seeing their assets plundered to meet their former spouses’ debts, when a judge ruled that they were no longer protected from creditors when they split. That case concerned a couple, David and Wendy Pearl Haines, who owned jointly a property near Stourport-on-Severn, Worcestershire.

Lawyers predicted at the time that trustees in bankruptcy would now start “rummaging through their files” to see whether there were assets in a divorce case that they could now proceed against. The decision is predicted to affect at least 20 per cent of the 120,000 people expected to file for bankruptcy this year.

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