Declaring Bankruptcy
If you’re considering declaring Bankruptcy in Ireland, there is understandably a lot of research to do to ensure you have fully understood the process, the repercussions and any alternatives that might better suit you.
However, Irish debt solution regulations have undergone many changes in the last few years, and most recently, months, so it’s important to ensure you’re up to date with the changes.
The recent changes in bankruptcy and debt solutions have muddied the waters in an already complicated area, so we’ve put together some information to help give you an overview of Bankruptcy in Ireland and the alternative options available.
Although it may seem daunting, there have been many positive changes that could make your situation much easier to cope with.
In fact, before you can even declare yourself bankrupt in Ireland you need to prove that no alternative solutions were viable for you.
If the routes highlighted above don’t prove to be practical solutions to your debt, you may decide that Bankruptcy is the best option for your financial situation.
Bankruptcy in Ireland is “the settlement of debts of something who is wholly or partially unable to pay off their debts.” Undertaking the act of Bankruptcy will allow the court official of the Official Assignee in Bankruptcy to distribute your assets fairly between your creditors and offer you protection from them.
There are two ways to go Bankrupt in Ireland.
- You can declare yourself Bankrupt
- Your creditors may petition for you to become bankrupt.
Things to bear in mind when it comes to Bankruptcy in Ireland
- If you’re applying to declare yourself Bankrupt, the process isn’t free. You must lodge an initial €200 towards the costs of the process. For financial advice on Bankruptcy in Ireland and other issues surrounding debt advice, the Money Advice and Budgeting Service offers some exceptional resources.
- Once you are declared bankrupt all your assets are sold by the Official Assignee to pay your creditors. The change back in December 2013 allows you to keep up to €6000 of ‘excluded’ assets such as furniture, clothes and necessary items for those dependent on you. This was increased from €3,100.
- The court may use your salary or pension for the benefit of your creditors.
- Assets you gain after you become Bankrupt (such as inheritance) may still be seized by the court for the benefit of your creditors.
- Your family home, whether it’s owned jointly or by you alone, can only be sold by the Official Assignee if the court gives prior permission. The Court may postpone the sale of your home after weighing up the interest of your creditors and your family.
Recent Changes in Bankruptcy Legislation
There have been many changes to Irish Bankruptcy laws over the last couple of years. These alterations signify change for those who are already declared bankrupt, and those who face bankruptcy in the future.
In December 2013, the bankruptcy legislation dramatically changed, resulting in the time period of bankruptcy reducing from 12 years to only 3 years. As of January 2016, this was reduced further to 1 year, as well as the changes to other Bankruptcy legislations.
Further information about the most recent Bankruptcy legislation (amended & signed in December 2015 and introduced January 2016) are listed below:
- You are deemed bankrupt for one year. In 2016, those who are declared bankrupt are now only deemed bankrupt for 1 year. In 2013, the time period of which a bankrupt person was declared bankrupt was 3 years, and prior to that, it was 12 years. For those who have been bankrupt previously and have served three or more years on their bankruptcy must only serve an additional 6 months.
- The ownership of a bankrupt person’s home is returned to them after 3 years. The amended Bankruptcy Act 2015 permits that ownership of your home is re-vested in you 3 years after you have been adjudicated bankrupt, depending on any outstanding mortgage. (Although there are some exceptions)
- Income payment orders/agreements will last 3 years. These are any of the pre-negotiated payments you need to make, and they will stop after 3 years. This was previously 5 years. (This is not applicable in cases of non-co-operation or concealment of assets)
- Bankruptcy can be extended in cases of Non-co-operation or Concealment of Assets. This means that you are liable to be declared bankrupt for longer than the one-year period if you do not co-operate with your specific terms of bankruptcy, or if you attempt to hide or conceal other assets in your name.
- The person in debt must show that they have made reasonable attempts to settle their debt. Bankruptcy was once the only option for those struggling with severe debt problems. However, the introduction of the aforementioned alternatives has given more flexibility to people.
The following change isn’t recent, but it’s still very relevant to those who are declaring bankruptcy.
- Posting notice of bankruptcy on the ISI website. An added expense of the bankruptcy process was the legal obligation to announce your bankruptcy in the newspapers. This would incur an advertising fee. However, recent changes allow for bankruptcy announcements to be posted on the ISI website free of charge.
The Difference Between Bankruptcy & Liquidation (Other Insolvency options)
Bankruptcy and liquidation are the last resorts in paying off creditors and dealing with debt for individuals or businesses in financial difficulty. However, many are unsure of the differences between the two legal processes.
Bankruptcy
An individual in extreme financial difficulty can petition the court for bankruptcy to gain immediate financial relief and to avoid legal action against them from creditors. Bankruptcy can be initiated by a creditor or a debtor. If a creditor applies for a debtor’s bankruptcy, the debtor must owe the creditor at least £750 in order to proceed with the bankruptcy process.
The individual’s assets will be assessed and sold to pay off the debts. If the debtor’s assets do not cover the amount of debt owed to the creditors, a split may be made on a percentage basis.
A bankruptcy petition must be filed at a county or court or the High Court in London. The court will decide whether or not the bankruptcy petition is successful.
An Official Receiver will be appointed to process the bankruptcy if the court grants the application. The Official Receiver is responsible for protecting the debtor’s assets during the investigation into their finances.
Liquidation
Liquidation differs from bankruptcy in the sense that the business cannot be resuscitated, whereas an individual can make a fresh start after becoming bankrupt.
While creditors can petition the court for a business’s liquidation, a business can enter liquidation voluntarily.
The business will be taken care of by an administrator who will work to try and salvage the financial situation of the business. A creditor may apply to wind up the company. If this occurs a liquidator may be appointed to be responsible for the deregistration of the company.
A liquidator will also collect and sell the company’s assets. If there are not enough funds to pay off the creditors, each creditor will receive a payment proportionally divided between them.
Capital will only be returned to shareholders if there are surplus funds. In all cases, the costs of the liquidator are met first.
Getting Bankruptcy Support & Advice
Going through a debt crisis can be incredibly overwhelming. However, the new legalisations are designed to make the both the process and the aftermath easier to cope with and manage. Whether you’re suffering personal or business debt, there are now solutions aimed at solving your debt problems.
Gibson and Associates can provide both advice and services to ensure the process goes smoothly.
Please complete an Online Enquiry, call us on +353 (0)1 264 5555 and we will explain all of your options, without any obligation.
Frequently Asked Questions
Find our answers to personal insolvency questions below:
> What is the point of bankruptcy?
> What happens when I seek to declare bankruptcy?
> Can I apply for bankruptcy before I attempt to apply for personal insolvency?
> Am I eligible for personal insolvency?
> Will I be able to keep my home if I am insolvent?
> Can I save money if I am insolvent?
> How can I come to a personal insolvency arrangement?
Why Choose Gibson & Associates?
Solicitors offer a lot of advantages over heading straight to a personal insolvency practitioner. Where a personal insolvency practitioner will only look at the numbers involved, Gibson & Associates look at the issues that led to you becoming insolvent in the first place, and take these into account.
In some cases, this could invalidate the debt and even result in the return of money to you – in the event of, for example, reckless lending or fraud, it is possible that you should never have been in debt in the first place, and we can help sort out and resolve the situation in your favour.
Our team of Insolvency solicitors can work with you to get a great plan in place, working towards a solution that you can be genuinely happy with. Read our case studies to see how other people have benefitted from our unique service, or contact us to start working towards a brighter future today.
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