By now many of you will be aware through the extensive media coverage of the matter in recent months that the new Personal Insolvency Act 2012 has introduced some significant changes in the area of Bankruptcy with the reduction in the term of Bankruptcy from 12 to 3 years being.  There are a number of basic points that people should be aware of if considering Bankruptcy as an option:

  • Term of Bankruptcy reduced from 12 to 3 years. The bankrupt will be automatically discharged after this time.  (However, you may still be under an obligation to contribute to your debts for a further 5 years)
  • An Official Assignee is appointed by the Court and will operate under the ISI body. (You must lodge €650 with the ISI Bankruptcy division.  See www.isi.gov.ie for details)
  • Notification of Bankruptcy can be published on the Insolvency Service Ireland (ISI) website free of charge.  No longer has to be published in a local and national newspaper.  This reduces the costs significantly.
  • All assets transfer to the Official Assignee once an order of  Bankruptcy is made.
  • Salary, pensions and any other sources of income including rents will be calculated as part of the contribution to Creditors such as financial institutions, suppliers, credit card companies, employees etc.
  • Any additional assets you acquire during the course of your bankruptcy, e.g. an inheritance or ‘windfall’ will form part of your contribution to the creditors and will transfer to the Official Assignee for this purpose.

 

  • No deductions are made from Social Welfare entitlements.
    • If you own a business, you will be able to continue trading under the same name as that prior to being declared bankrupt. If you begin to trade in a name other than that at the time of being declared Bankrupt you must disclose this.
      • It is important to note that during the period of bankruptcy you must not act as a director or manager of a company without the express permission of the Court.
      • If, during the course of your bankruptcy, you seek a loan or other credit facility in excess of €650 you must disclose this.
      • Joint ownership of property including the Family Home is now split between the remaining non-bankrupt co-owner (usually your spouse) and the Official Assignee.
      • Generally speaking, the Court will balance the interest of the Creditors and those of your family in respect of the Family Home and will not permit the Family Home to be sold off unless it is reasonable and practicable to do so.  Factors to be considered here will include the needs of other family members and dependants residing in the home and the cost of alternative suitable accommodation.
      • Official Assignee will sell the assets and pay expenses, fees and priority debts such as taxes.
      • The remainder is then divided amongst your Creditors on a priority basis (secured and unsecured)

If there is any surplus at this stage, the remaining assets are transferred back to you and you are discharged from Bankruptcy at this point even if less than 3 years. After the 3 year period you will automatically be discharged from Bankruptcy but any property that has not yet been sold will remain with Official Assignee until a sale has been finalised.