Almost as many people applied for bankruptcy in January as in the whole of last year, according to the latest figures from the Department of Justice.
The Courts Service has told Justice Minister Alan Shatter that in 2013, there were 19 applications for self-adjudicated bankruptcy, of which 17 were declared bankrupt and two were adjourned to this year.
“In 2014, 17 applications had been lodged in the Examiners Office as of January 27, of which six cases are listed before the courts,” said Mr Shatter.
“The Courts Service has indicated the remaining cases are expected to be listed before the High Court during February 2014.”
On Monday, the Irish Mortgage Holders Organisation said four of its clients successfully applied for bankruptcy, with debts between €50,000 and €420,000.
Director David Hall said his group had “maybe two dozen” clients going thr-ough the process. However, he said people had to view bankruptcy as an option of last resort and said if they were to pursue it they needed to make sure they availed of advice services. He also sought to eradicate the myth that bankruptcy guarantees keeping the family home.
“If you cannot afford to pay your mortgage and you cannot make an arrangement with your lender to restructure your loan to an amount that is affordable, irrespective of bankruptcy, you are risk of losing your home,” he said.
Mr Hall said during Monday’s hearings, the judge asked two questions:
* What arrangements have you tried to come up with your creditor? (He was looking for more evidence to ensure that some attempt had been made to do a deal with the creditor.)
* What is the quality of the application and the paperwork being submitted?
“This is not a magic wand system as is being portrayed,” said Mr Hall.
“[This year] more people will go towards bankruptcy because they are ineligible to avail of the insolvency service arrangements, not because they don’t want to. If you apply to the insolvency service and you show the service you don’t have any money above the insolvency service guidelines, they will not allow you to go through the system. You cannot apply.”
The Insolvency Service of Ireland offers three debt resolution mechanisms other than bankruptcy — debt relief notices, debt settlement arrangements, and personal insolvency arrangements. (PIPs)
“It’s a remarkable process we have when the most vulnerable and the people who are most insolvent — we have a privatised insolvency service that does not cater for [them] the most insolvent people. Therefore the only option available to them is to go bankrupt.”
He also criticised the lack of a public system.
“It is an entirely privatised system so naturally the privatised PIPs are quite within their rights to charge for their services, but unlike private transport vs public transport, or public health v private health, there is no public and private insolvency regime, it is only private.
“It is the most remarkable thing to have a system that is exclusively a privatised system to deal with people who are over-indebted where you need funds to make a payment to get help.”
He said this year would be one of major frustration for those who are insolvent yet have no mechanism to deal effectively and transparently with creditors.
“I see many people in court for repossession of family homes based on the third quarter figures of last year and then there will be significant numbers of people who will seek to adjudicate themselves bankrupt because of inaction by creditors and because of ineligibility to apply for the insolvency service arrangements because of a lack of money.”
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