The law in relation to debt, debt management and bankruptcy in Ireland has changed over the last number of years. While this article focuses on how to claim bankruptcy in Ireland , bankruptcy is just one option. Depending on the level of debt, income and assets involved individuals may consider a Debt Relief Notice (DRN), a Debt Settlement Arrangement (DSA) or Personal Insolvency Arrangement (PIA). These processes are managed by an approved intermediary or a Personal Insolvency Practitioner (PIP).
While personal cash loans, business, family, revenue debts, guarantees, unsecured portion of property and trade debts together with secured debts and mortgage debt can be dealt with under the bankruptcy application Court fines and debts incurred after bankruptcy cannot included.
Application for Bankruptcy In Ireland
Once an application for bankruptcy has been successfully made ownership of all property automatically transfers to Official Assignee. The only assets that do not transfer are assets up to the value of €6K. Any property acquired during the period of bankruptcy transfers to the Official Assignee. The Applicant must complete a Statement of Personal Information and a Statement of Affairs. The Applicant will be interviewed and a notice published in Iris Oifigiuil, on the ISI website and on the Register of Bankruptcies maintained at the Office of the Examiner of the High Court. The register records all bankruptcies and their status i.e. whether discharged or not.
The Applicant has legal obligations in connection with the administration of his / her estate to include delivery of accounts and title deeds, assisting the assignee etc. The Official Assignee may issue a summons seeking examination under oath. A failure to co-operate may result in conviction for offences under the legislation with penalties which include imprisonment for a term of up to 5 years and an extension of the bankruptcy period.
While the Applicant can continue in employment, he / she cannot act as a company director without the consent of the Court. If the Applicant is a member of a professional body that body may have certain regulatory requirements which are separate to the legislative provisions herein.
The Official Assignee will seek a contribution from income applying the ISI guidelines on Living Expenses if there is a surplus. If income is ordered to be paid it is under what is called Income Payment Order and lasts up to 3 years. Social Welfare payments are not subject to order of the official assignee.
Pensions are not transferred to the Official Assignee. Pension income receivable will be treated as income for the purposes of bankruptcy. An approved retirement fund (ARF) or vested personal retirement saving (Vested PRSA) may be included in the asset pool.
The Applicant’s interest in the family home transfers to the Official Assignee but the spouse’s interest does not. The Official Assignee cannot sell the family home without first obtaining permission from the High Court.
The Court will consider the matter having regard to the interest of the creditors, the spouse, civil partner and dependents. If there is no equity there is no benefit to the Official Assignee to sell the property. If the Official Assignee has not taken steps to sell the family home within 3 years the family home may automatically revert subject to any outstanding mortgage, with some exceptions.
Transfer of Property
Bankruptcy has legal implications for the transfer of property completed before the Bankruptcy Order. The Official Assignee can review and possibly challenge transfers made before bankruptcy and can apply to Court to set aside these transactions for the benefit of other creditors.
Other Implications of Bankruptcy
It is an offence for a bankrupt to obtain credit in excess of €650 without disclosing the bankruptcy. Bankruptcy affects an individual’s credit rating and will influence information held by the Irish Credit Bureau. However a bankrupt can operate a bank account.
Discharged from Bankruptcy
This is probably the greatest change in Irish law with bankruptcy periods being reduced to one year. This period could be shorter a resolution is reached with creditors but longer if there is a failure to co-operate. If an income payment order / agreement has been made this continues for three years. Ownership of assets remain with the Official Assignee until sold.
Information in relation to the above can be obtained by contacting Giles J. Kennedy & Company, Solicitors, 81 Eccles Street, Dublin 7.