Bankruptcy is a process where the ownership of an insolvent person’s property transfers to the Official Assignee in Bankruptcy to be sold by him for the benefit of those to whom the individual owes debts (creditors). It generally requires debts to be in excess of €20,000 and includes both secured debt and unsecured debt.
Bankruptcy proceedings are brought in the High Court. The application for a Bankruptcy Order is filed in the Office of the Examiner of the High Court. When the person’s property is sold, the Official Assignee will make sure that the proceeds are shared out fairly among creditors and any outstanding debt will be written off. Bankruptcy normally lasts for 3 years.
Prior to making yourself bankrupt, you must have made reasonable efforts to have made use of the alternative arrangements such as: – Debt Relief Notice (DRN), Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA).
Main Impact of Bankruptcy
- Your property transfers to the Official Assignee.
- You have a duty to contribute from surplus income (income less reasonable living expenses) towards your debts for up to 5 years.
- You are discharged from bankruptcy after 3 years.
- All your debts are written off.
The Family Home
Your interest in your family home will transfer to the Official Assignee along with all other property as part of the bankruptcy process. You may not necessarily lose your family home if a schedule of agreed repayments can be made between the lender and the official Assignee (which are not outside reasonable living expenses approved by the OA). If the OA wishes to sell the family home, then a High Court application must be made. A decision will be made by the Courts having consideration for the impact of the sale on the creditors as well as the individual’s dependent on the bankrupt individual. If there is no equity in the family home, it won’t be of an immediate interest to the OA to sell.
When an individual is bankrupt in Ireland, the proceedings maybe recognised across all other European Member States (except Denmark). Under the European Community Insolvency Regulation, the OA has the right to sell any foreign property for the benefit of the creditors.
There are a number of duty and obligations to be met in connection with bankruptcy. There are forms to be completed, High Court appearances to be made, interviews to attend and a number of other legal requirements to be complied with. While an individual may make the necessary petitions themselves, it is strongly recommended that appropriate professional advice be sought.
The information contained above is intended as a general guide to the subject matter, it should not be used as a basis for decisions. For this purpose advice should be obtained which takes into account all the individual’s circumstances from suitably authorised professionals. Every effort has been made to ensure the accuracy of the information. We are unable to accept liability for any errors or omissions which may arise.