In recent times there has been much publicity and discussion around bankruptcy and the suggestion that an individual should be discharged from bankruptcy after one year. By virtue of the Bankruptcy Act of 1988 and the Personal Insolvency Act 2012, many changes have been made to the law on bankruptcy. There is no doubt that it has now become a more accessible mode of being discharged from one’s debts but there are certain features that one needs to be aware of prior to considering bankruptcy.
For instance, it is a High Court process for people in debt over €20,000 and before applying for bankruptcy, an individual must have explored the alternative solutions contained in the Personal Insolvency Act 2012 namely the Debt Relief Notice (DRN), the Debt Settlement Arrangement (DSA) and the Personal Insolvency Arrangement (PIA). As explained in previous articles in this area, the first step that an individual should take is to meet with a registered Personal Insolvency Practitioner to identify the most appropriate relief taking into account one’s circumstances.
All types of debt can be included in a bankruptcy option such as unsecured and secured debt together with business loans and credit card loans.
When one is declared bankrupt, all property and possessions are then transferred to the Official Assignee. The function of the Official Assignee is to arrange for these items to be sold and the money realised is distributed to the creditors. Essentially, the Official Assignee deals with all aspects of the bankrupt’s finances thus putting an end to the dreaded demand letters. It should also be noted that all is not lost when somebody is made a bankrupt as under the law one is entitled to a reasonable standard of living including food, clothing, education, health care and even an allowance for savings.
As the law currently stands, the bankrupt can be discharged from bankruptcy after three years but there is provision in the legislation for payments to be made in respect of debts for up to five years.
The question which is most often asked when somebody is considering bankruptcy is what it means for the family home. The interest of the bankrupt person in the family home will transfer to the Official Assignee. The Official Assignee will in most cases try to sell that interest back to the other joint owner such as spouse or civil partner. The Official Assignee cannot sell the family home without first obtaining permission from the high court.
A bankrupt person can continue in their current employment even though they are bankrupt.
For more information on the process of bankruptcy and whether it is an option for you please contact any one of our Personal Insolvency Practitioners.