Major Change as Bankruptcy Term Reduced to One Year
Through the Bankruptcy Act 1988, the Personal Insolvency Act 2012 and the Civil Law and Courts (Miscellaneous Provisions) Act 2013 Ireland’s archaic bankruptcy law underwent major change. On Christmas Day 2015 it went a significant step further.
Signed by President on Christmas Day
On Christmas Day 2015 President Michael D Higgins was obliged to work to meet the deadline for signing the Bankruptcy (Amendment) Act 2015 into law.
When the final step (the Minister for Justice and Equality setting the commencement date) is taken among the main changes the new Act will introduce are:
- The standard term of bankruptcy will fall from 3 years to 1 year. Exceptions will arise where there is non-cooperation or concealment by the bankrupt person. These may be up to 15 years in serious cases.
- The maximum duration of bankruptcy payment orders will reduce from 5 to 3 years, except where extended for non-cooperation or concealment.
- The home of a discharged bankrupt will automatically re-vest in him or her 3 years after the bankruptcy, if the Official Assignee has not sold it (or applied for a Court order to do so). Debt (e.g. mortgage) attaching to the property will remain.
- The number of court sittings required in the bankruptcy process will be reduced.
Among the questions solicitors and other practitioners are now asking themselves are will the changes trigger a fresh wave of Irish bankruptcy applications and will they finally end so called Bankruptcy tourism to the UK and other jurisdictions? There is no doubt the economy would benefit from a clear out of historic debt but Irish people, unlike, for example their US counterparts, have historically shown themselves remarkably reluctant to seek refuge in bankruptcy.
Author Bio: Thomas Barry is a Partner in Thomas Barry & Company, a legal practice based in Dublin. He has over 30 years experience. He regularly writes on legal issues.