Whilst historically bankruptcy was viewed as a solution of last resort, with many perceived stigmas attached to it, an overhaul of Irish bankruptcy legislation has now made this a potential option to consider when assessing the sustainability or otherwise the level of debt accumulated by an individual.
It is now six years since the economic crisis first hit Ireland and many people are now debt weary – they are simply tired of battling on with unsustainable debt with no prospect of ever returning to solvency. The banks are also contributing to this situation as they seek to avoid debt write downs with the upcoming stress testing of European banks.
For many people, if debt negotiation and other personal insolvency options fail or are unsuitable, then bankruptcy is another option. With the term for automatic discharge from bankruptcy now reduced to three years (from twelve), the numbers taking advantage of this process has risen sharply, and we expect this rise to increase at an even greater rate in the near future. The main advantage of bankruptcy is debt write off. If you declare yourself bankrupt then on the day of adjudication all your debt is immediately written off. In the first quarter of 2014, 66 people were declared bankrupt. Between them they had a total of €136m in debt written off – an average of just over €2m each.
Once you are declared bankrupt, any assets you own automatically transfer to the Official Assignee who will sell the assets and distribute the proceeds amongst your creditors. The Official Assignee will take the needs of the family into consideration in his treatment of the family home. You can continue employment during your term of bankruptcy, and the Official Assignee may require a contribution towards your creditors for a period of up to five years. You may not act as a company director or an elected representative once you are declared bankrupt and obtaining finance of any type (credit card, store cards, hire purchase, etc.) is virtually impossible. However for many individuals this is still potentially a sensible option to release them from the pressure associated with dealing with an unsustainable level of personal debt.
At UHY Insolvency we provide professional advice on all aspects of bankruptcy together with other debt options and we can complete all documentation and legal submissions in relation to bankruptcy if this option is the chosen route. Why not contact us and see if bankruptcy could be the debt write off solution for you?
Personal Insolvency Practitioner
1890 987 913
042 939 4200