Not an easy way out
However, the personal insolvency schemes are simply not going to give a solution to everyone, and some will resort to bankruptcy.
Bankruptcy is now much more attractive, with the duration cut from 12 years to three years. That opens the possibility of someone going from debt-laden to debt-free within three years, though obviously with a loss of property and assets.
Bankruptcy is a process whereby the assets of an individual unable or unwilling to pay their debts are transferred to a trustee given charge of the assets by the High Court to be sold. All assets, with the exception of necessities up to a value of €3,100, are transferred to the official assignee, who will sell them.
When the assets are sold, the costs, expenses, court fees, and certain priority debts are paid. After this, the net proceeds are distributed to those owed money.
A bankrupt may be discharged from bankruptcy in a number of ways. No bankrupt can be discharged unless there are enough funds to pay:
* The costs of the official assignee;
* High Court fees;
* The costs of the petitioning creditor;
* The preferential debts of the bankrupt.
* Discharge after payment of debts in full: This is where the bankrupt’s creditors are paid in full. If the High Court so allows, interest may also be payable. Normally, interest is only paid where surplus funds are available.
* Discharge with the creditors’ consent: This is where all of the bankrupt’s unsecured creditors consent to the discharge.
* Discharge after making composition with the creditors: This is where unsecured creditors agree to accept payment of a certain percentage of their debt in settlement of the full amount. This must be supported by at least 60% in number and value of those creditors who vote at a sitting of the High Court.
The bankrupt must provide the official assignee with sufficient funds to make this settlement and pay his/her unsecured creditors. This is called an offer of composition.
* Discharge after paying fifty cent in the euro: This is where all of the bankrupt’s property has been fully sold or disposed of and his/her creditors have received fifty cent in the euro on their debts.
When someone is discharged from bankruptcy, any funds or properties remaining with the official assignee are returned to the former bankrupt.
Bankruptcy impacts not only on the person made bankrupt, but also on their creditors, as well as others, including family members or people who have a commercial relationship with the bankrupt.
All property held by you when you are made bankrupt vests in the official assignee for the benefit of your creditors.
The High Court may appropriate your salary or pension for the benefit of your creditors. However this is subject to any provision the High Court may make to meet your family responsibilities and your personal situation.
The bankrupt’s interest in the family home vests in the official assignee as with all other property.
However, the official assignee can not sell the family home without obtaining permission from the High Court. Where the official assignee seeks this permission, the High Court may postpone the sale of the family home having regard to the interests of the creditors and of any spouse and dependants of the bankrupt.
If you have a mortgage or have borrowed against this home, that is a secured loan against the property, and the official assignee’s interest only relates to the equity remaining in the property.
Yes, you can continue in current employment or seek employment.
There is no outright prohibition on you travelling abroad but you should inform the official assignee. You may be arrested if it appears to the High Court that you may be leaving the State to avoid the consequences of your bankruptcy.
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