Service director Lorcan O’Connor said: “If you were to look at the UK, for every bankruptcy there are approximately two alternatives to bankruptcy. That is broadly where we are at the moment.”
Responding to a claim by the Irish Mortgage Holders Organisation, he said: “We are still very low in terms of bankruptcy numbers and in terms of overall alternatives to bankruptcy.
“The UK pro-rata equivalent would suggest that we should be at about 5,000 alternatives to bankruptcy per year and 2,500 bankruptcies per year but we are obviously not close to that.”
The number of bankruptcies in the first quarter of the year is the highest on record. The Insolvency Service blamed an increase in debtor petitions, accounting for 94% of bankruptcies.
It said that, in the past, the majority of bankruptcies were based on creditor petitions.
The total debt involved in bankruptcy adjudications for the first quarter was over €124m. That was made up of 69% secured debt and 31% unsecured debt.
In the case of secured debt, it is likely that the current market values of securities were significantly below debt levels.
The service examined the number of people losing their homes through bankruptcy.
“In 70% of cases, people did not retain their home,” said Mr O’Connor.
“Interestingly in a lot of situations, they had lost their home before the bankruptcy event. They might have done that voluntarily by literally handing over the keys and walking away, or may have been forced to do so.”
In 23% of cases, debtors managed to keep their homes.
“The way in which you keep your home in bankruptcy is simply that the official assignee who runs the bankruptcy allows everyone an allowance to keep a roof over their heads,” Mr O’Connor said.
“You have been declared bankrupt, you have got a house and two kids. The official assignee will look to see what the average home rents for a home in that area. Whatever that might be, he will allow you to retain out of your income and that may be enough to keep you in your home.
“The bankrupt can go back to the bank and say, ‘I know I am in arrears but I have been in arrears partly because I have had the credit union at my door, the credit card company at my door, and a whole host of other debts. Those are all gone now because I am bankrupt. Now I am being allowed to offer you €800 per month, can we do a deal?’”