Lorcan O’Connor — director of the Insolvency Service of Ireland — says he expects the numbers applying for bankruptcy to double following the changes made to the bankruptcy regime here last year.
“There is likely to be a be a large increase,” he told the Irish Examiner, noting that as recently as 2007 there was only one person who had applied for bankruptcy.
He also said that the Insolvency Service with Mabs — the Money Advice and Budgeting Service — is now represented in all repossession courts around the country to ensure that people facing repossession are aware of other solutions.
“Quite often they are not. But what we have seen as a result of our presence is that the level of engagement has increased,” he said.
The Irish bankruptcy term was reduced to one year and now matches regimes in other common law jurisdictions and will likely end so-called bankruptcy tourism.
“We are looking at just short of 500 last year and I would anticipate that that would be over a 1,000 in the year ahead,” said Mr O’Connor.
He said the that the results of the changes made last year to the bankruptcy term and the removal of the so-called bank veto, as well as other initiatives will encourage more people to seek help.
“They may well think they need to go bankrupt, but when they seek advice they may actually resolve their problems short of bankruptcy. But when they are in that advice level at least they can return to solvency through whatever is the most appropriate solution,” he said.
“And in terms of the PIA [personal insolvency arrangement] — the solution short of bankruptcy designed to keep people in their home— is the most popular solution already. We think with the removal of what has been termed as the bank veto that numbers are only going to increase. We were already at an 80% acceptance of PIAs,” he said.
The Insolvency Service said yesterday that including 641 PIAs, it had helped facilitate a total of 1,700 solutions for debtors last year, an increase of 70% on 2014.
Asked whether the overall figures still looked low given the extent of the crash here, Mr O’Connor said there were over 125,000 informal restructures between banks and debtors in the last two years which would likely not have been agreed if the service had not been set up.
“It was an important catalyst to get the whole landscape moving. Clearly we expect the numbers to increase,” he said.
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