Key Post How bankruptcy will work under the new Personal Insolvency Bill

I haven't seen any guide to the proposed rules, so here is my understanding. Corrections welcome.

Lavelle Coleman have an excellent article on the existing process [broken link removed]
Courts.ie have published [broken link removed]

I am writing this from the point of view of a person who wants to go bankrupt as distinct from the point of view of a creditor who wants to bankrupt a person.

Applying for bankruptcy

The applicant must be have at least €20,000 of creditors in excess of debtors.

The applicant must swear that he has made a reasonable effort to reach an appropriate Personal Insolvency Arrangement or Debt Settlement Arrangement

The Court may adjourn the hearing to allow the debtor an opportunity to enter into a PIA or a DSA.

The discharge

The bankruptcy shall be discharged on the 3rd anniversary of the adjudication

A creditor or the Official Assignee can object if the bankrupt has hidden assets or has not cooperated

Bankruptcy Payment Order

A bankrupt can be required to make payments to the Official Assignee for up to 5 years on the application of the Official Assignee or a creditor.

The Court can vary a bankruptcy payment order where there has been a material change in the person's financial circumstances.

The bankrupt is discharged after 3 years and can resume normal business. But they may have to use their income to pay towards their debts for a further 5 years. If their income improves in that 5 years, the payment amount can be increased.

The actual sections

Section 133 (b) (4) A debtor may not present a petition for adjudication unless the petition is accompanied by an affidavit sworn by the debtor that he has, prior to presenting the petition, made reasonable efforts to reach an appropriate arrangement with his creditors relating to his debts by making a proposal for a Debt Settlement Arrangement ora Personal Insolvency Arrangement to the extent that the circumstances of the debtor would permit him to enter into 15 such an arrangement.

(5) A debtor may not present a petition for adjudication unless the petition is accompanied by a statement of affairs and such statement of affairs discloses that thedebts of the debtor exceed the assets of the debtor by any 20 amount greater than €20,000.



Section 136 15.—(1) Subject to subsection (2), where thepetition for adjudication is presented by the debtor the Court may, where it considers it appro priate to do so, and where it is satisfied that the debtor is insolvent and unable to meet his engage ments with his creditors, by order adjudicate the debtor a bankrupt.

(2) Before making an order under subsection (1), the Court shall consider the nature and value of assets available to the debtor, the extent of his liabilities, and whether the debtor’s inability to meet his engagements could, having regard to those matters and the contents of the debtor’s statement of affairs filed with the Court, be more appropriately dealt with by means of—

(a) a Debt Settlement Arrangement, or

(b) a Personal Insolvency Arrangement,

and where the Court forms such an opinion the court may adjourn the hearing of the petition to allow the debtor an opportunity to enter into such of those arrangements as is specified by the Court in adjourning the hearing.”.


Section 143
85.—(1) Subject to subsection (2) and section 85A every bankruptcy shall, on the 3rd anniversary of the date of the making of the adjudication order in respect of that bankruptcy, unless prior to that date the bankruptcy has been discharged orannulled, stand discharged.

85A.—(1) The Official Assignee or a creditor of the bankrupt may, prior to the discharge of a bankrupt pursuant to section 85, apply to the Court to object to the discharge of a bankrupt from bankruptcy in accordance with section 85 where the Official Assignee or the creditor concerned believes that the bankrupt has—

(a) failed to co-operate with the Official Assignee in the realisation of the assets of the bankrupt, or

(b) hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors of the bankrupt.


85D.—(1) The Court may on application being made to it by the Official Assignee, the trustee in bankruptcy or a creditor make an order requiring a bankrupt to make payments to the Official
Assignee or the trustee in bankruptcy from his income or other assets for the benefit of his creditors (a “bankruptcy payment order”).

(2) The application referred to in subsection (1) may not be made after the bankrupt has been discharged from bankruptcy.

(3) An order made under subsection (1) shall not require a bankrupt to make payments for a period of more than 5 years, but nothing in subsection (2) shall prevent a bankruptcy payment order
having effect after the bankrupt has been dis charged from bankruptcy.

(4) In making an order under subsection (1) the Court shall have regard to the reasonable living expenses of the bankrupt and his family and the Court may also have regard to any guidelines on reasonable expenditure and essential income published by the Official Assignee or by the Insolvency Service.

(5) The Court may vary a bankruptcy payment order where there has been a material change in the circumstances of the person required to make the payments.

(6) Where a bankruptcy payment order is inforce as respects a bankrupt the provisions of section 65 shall not apply to the bankrupt.”.

Copied from another older thread. the comparison is to the existing Irish regime and not the proposed one.

A comparison of UK and Irish bankruptcy regimes

The UK and the Irish bankruptcy regimes and processes have come under the spotlight in recent months as many more Irish citizens look to see whether or not they have a viable option for dealing with their burdensome investment property debt. I have done an analysis of the two processes and picked out the main differences between the two to highlight what I see as the benefits of the system here in England and consequently how it may be used by you to wipe off debt that you cannot cope with anymore.

Cost and hassle much less in England
From what I have read it seems that in Ireland the filing of bankruptcy proceedings can be very tedious and expensive. I understand that there are advertising costs, solicitors and barristers fees, and two separate High Court attendances. It is commonly accepted that that the costs will not be less than €6,000. You will need €650 as a deposit and €1900 in realisable assets to start the process.
By contrast in England, the fees are currently £700. It is completed in just one morning with one appearance at court.

Open court in Ireland vs. in chambers in England - In England your bankruptcy is not even advertised
In Ireland I believe that you are subject to cross examination in open court about your affairs, which for those not used to a court process must be very difficult to handle.
In England your case is dealt with by a District Judge in chambers (private) where you can take your advisor for help and support.

Your bankruptcy is not even advertised anymore.

In England, you can keep your pension
Your affairs in both jurisdictions are handed by a similar official. Your assets such as you have them vests in this person and he realises any value for your creditors. The main difference it seems to me is that in the Irish system any property acquired during your bankruptcy for as long as it lasts can be taken from you and even your pension is not safe.In England, you get to keep your pension, a car with a value of up to £2000. You also have decent allowances which you can set against any income that you have. Here if you wish you can also keep your matrimonial home, subject to certain criteria. Your job in the very vast majority of cases is not at risk and you can keep and operate a bank account.

But best of all, there is automatic discharge after one year in England
In Ireland the there is an expectation that you should cover all your costs, fees and expenses and also the preferential creditors. They even expect your creditors to get 50c/€.
In England the repayment process is set out in statute. You can only pay an income payments order from your excess income for a maximum of 36 months. The Official Receiver has only 36 months to deal with any equity in your property or it reverts back to you.


The biggest difference is that in Ireland, subject to any subsequent changes, you will discharged only when , all after acquired property has bee disclosed, when all fees, costs and expenses and preferential creditors have been paid in full and either a dividend of 50C/€ has been paid or 12 years has elapsed.
In England you will automatically be discharged after one year.

You must establish a Centre of Main Interests in England
In order to qualify for a bankruptcy in England, you need to establish your Centre of main interest as being in England. I am going to do a separate piece on how to establish your centre of main interest.

[broken link removed]

Even with a new regime in Ireland, going to England is still a better option. It is just a tiny bit less penal than before.

High Time

I agree, but what prompted this post was another thread where the family with 2 kids and two permanent jobs couldn't countenance going to the UK.

I hope that this might also influence policy makers in their debate on the Bill.

Brendan

Brendan Burgess said:

High Time

I agree, but what prompted this post was another thread where the family with 2 kids and two permanent jobs couldn't countenance going to the UK.

I hope that this might also influence policy makers in their debate on the Bill.

Brendan

Click to expand...

I totally agree Brendan, thee is no short term realistic solution for these people, who lets face it will be the majority of those now in significant debt.

Steve Thatcher

Www.debtoptions.ie