Bankruptcy

Bankruptcy is the formal High Court process for making an individual insolvent (insolvency is the term typically used in reference to companies) who has debts in excess of €20,000.

During the process, the ownership of the individual’s assets is passed to the Official Assignee in Bankruptcy who will seek to sell those assets in order to repay creditors.  Any debt which remains, including unsecured debt, will be written-off.

There are a number of implications which any individual considering bankruptcy should be aware of including: 

• All property and possessions will transfer to the Official Assignee (except for essential assets up to a value of €6,000)

• Going forward, any surplus income (income less reasonable living expenses) must be used towards debts for up to three years

• The individual must disclose they are bankrupt if seeking credit above €650

• You will be discharged from bankruptcy typically after one year.  This may be less if a settlement with creditors is reached but, likewise, could be extended if the individual fails to co-operate with the process. 

The Bankruptcy (Amendment) Act 2015 (the 2015 Act) brought into force a series of changes in 2016, including the reduction in the duration of bankruptcy from three years to one year (this was twelve years up to 2013), the return of the bankrupt individual’s home to them after three years where possible and reducing the period of bankruptcy payment orders from five years to three years. 

As such, the legislature has made amendments for individuals facing bankruptcy which makes the process shorter and less impactful.

In addition to the 2015 Act, the Personal Insolvency Act 2012 outlines other debt resolution mechanisms, including:

• Debt Settlement Arrangement ("DSA") whereby an arrangement is made with creditors for the repayment of unsecured debt over a period of five years.

• Personal Insolvency Arrangements whereby an arrangement is made with creditors for the repayment or restructuring of secured debt (up to €3 million) over a period of six years.

Given the range of possible measures available to those in financial difficulty, it is imperative to seek specialist advice from a personal insolvency lawyer who can advise you of your legal options and the relative advantages and disadvantages of each.  Lavelle Partners’ Restructuring & Insolvency Team are renowned for its experience and level of expertise in this area of law and are well placed to advise you.