# Bankruptcy question relating to marriage and pensions



## Kitty1 (21 Nov 2014)

Quick question re bankruptcy ...



As a public service employee , is my pension safe? I am 30 yrs old

In the bankruptcy term of 3-5 years (5 years if there is an attached payment order ) - if I get married within that term does my situation remain the same or would a partners income be looked at ? 

I know my income would be taken over and I would have to live within the reasonable living guidelines (say the 1042 a month) - but is there someone literally checking that you spend x amount on electricity each month; x amount on food etc etc.....I suppose what I'm trying to ask is what if someone gave me a helping hand from time to time say by paying an electric or refuse bill of groceries...do I have to show where each cent goes ? Am I left with the 1042 plus the amount of my rent and its up to me to pay my bills myself ...as in car insurance, tax, esb, heat etc etc? As in do I just lose control of the surplus income outside the reasonable living guidelines amount ?

I'm just trying to weigh up the pros and cons and see are there any major drawbacks for me if I ended up in that scenario.

The negatives I see for most people is the seizure of assets and loss of family home - but I have no assets other than the car and id gladly hand over the house. 

An obvious advantage I see of the bankruptcy is my outstanding issues with revenue. I have outstanding NPPR (I left this property when I split with my partner in 2009 as did he) tax and the undeclared rental income. If I went bankrupt from my understanding this would all be cleared?


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## Jim Stafford (21 Nov 2014)

Before you consider bankruptcy you should really consider attempting to do either an informal scheme or  a PIA/DSA with your creditors.

Pensions and bankruptcy comprise a very complex interface of pension legislation, bankruptcy acts and tax legislation.

The Personal Insolvency Act 2012 introduced two new provisions into the 1988 bankruptcy Act relating to pensions on bankruptcy. Section 44A of the Bankruptcy Act now provides that assets under a relevant pension arrangement (other than payments already received or which the bankrupt was entitled to receive) shall not vest in the Official Assignee. A relevant pension arrangement is defined in the section and includes a retirement benefits scheme, retirement annuity contract, PRSA, overseas pension plan etc.

Section 44A goes on to provide that if the bankrupt is entitled to perform an act or exercise an option under the relevant pension arrangement which will result in the bankrupt receiving any amount of money (i.e. a pension or lump sum), that amount of money shall vest in the Official Assignee. In addition, the Official Assignee will be entitled to perform that act or exercise that option on behalf of the bankrupt. This will apply to acts which can be performed or options which are exercisable by the bankrupt prior to *or at the time of the bankruptcy or at any stage within 5 years of the bankrupt being adjudicated bankrupt.*

Translating the above legislation to your own circumstances, your pension would be 100% safe if you went bankrupt within, say, the next 10 years.

The Reasonable Living Expenses (RLE's) are set by the ISI, and it is up to you to spend your "allowance" as you see fit.

If you got married then it would be expected that your spouse would pay up at least 50% (if  they could afford to) of your combined RLE's.

If someone gave you a helping hand to pay expenses, watch out for possible Capital Acquisition Tax issues.

The NPRR should be discharged from the sale of the property.  Any taxes owed (provided there was no element of "fraud" ) would be written off in a bankruptcy.

Jim Stafford​


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## Kitty1 (21 Nov 2014)

Thanks Jim

I have consulted with a PIP and submitted my financial details and he feels that there is no way of working an insolvency arrangement as there isn't really any money left over after he deducts the Reasonable Living Expenses and what I am paying in rent. 

I may have some chance of the bank accepting an informal lump sum....the lump sum could be gifted to me by a family member , but my fear there is this doesn't sort out the revenue problem for me. Besides, even if the bank I hold the mortgage with accepted this offer I doubt the bank I hold the personal loans with would. 

After reading your response I guess the only thing I'm left worried about is marriage.
I am finally in a new chapter of my life with a new partner and this is one of the main reasons I want all this financial stuff behind me. 
However, as it is likely we would be married within 3-5 years this is worrying


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## Kitty1 (21 Nov 2014)

If I were to somehow still manage a personal insolvency arrangement - would the same apply if I got married ?


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## Gerry Canning (21 Nov 2014)

Kitty. 

Any bankruptcy/Personal insolvency is twix you and you lenders.

I cannot see how your marriage would impact on that.
In other words Mr Hubby is not involved.
If I am wrong I am sure other contributors will correct me.
I hope and expect to be correct.


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## 44brendan (21 Nov 2014)

> If you got married then it would be expected that your spouse would pay up at least 50% (if they could afford to) of your combined RLE's.


This appears to be the issue that caused the concern. As per gerry's post it has no impact on your future husbands income or assets. It simply means that the reasonable living expenses for a couple living together will be halved in apportioning your share. Future husband can contribute whatever he can afford and it will have no impact on him.


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## Kitty1 (21 Nov 2014)

So, say for example at the moment I may be allowed in region of 1000 per month as a single person, plus (just example) 600 eur for my accommodation . 
I take it once married it would be assumed that you live together and therefore whatever property I'm renting I would then only be allocated half the rent as it would be expected husband will pay 50%?


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## Kitty1 (21 Nov 2014)

And if this is the case, say bankruptcy is 3 years but they expect payments for 5...if I got married after year 3 does the same apply ?

Is it 3 years or 5 years?


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## 44brendan (21 Nov 2014)

Thats' more or less it! You can access the rules on the ISI website!


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## Matthew Moore (21 Nov 2014)

Kitty1 said:


> After reading your response I guess the only thing I'm left worried about is marriage.
> I am finally in a new chapter of my life with a new partner and this is one of the main reasons I want all this financial stuff behind me.
> However, as it is likely we would be married within 3-5 years this is worrying



Don't put your life on hold, the route you take will not impact your partner in any way other than the contributions they make to the household. 
Finding somebody you can see yourself married to is all that matters, everything else is just cr@p that will get sorted eventually. 
At least your partner knows what they are getting into, everything was rosy in the garden when we got married in 2009, by 2011 I was insolvent (no fault of my wife!) and heading for bankruptcy! That's how it goes, for better or worse


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## Kitty1 (22 Nov 2014)

I don't really understand the 3/5 year thing with bankruptcy.

How is it determined if they will extend payments for 5 years? 

Let's say for example I'm declared bankrupt , I live within the reasonable expenses guidelines and they take what little surplus is left over and say this is for 5 years. After the 3 years has passed I am discharged from bankruptcy but still continuing the payments for years 4 and 5. If I'm correct in that understanding - does the payment amount remain the same as it was in year 3, despite my circumstances in year 4? Do I have to live within the reasonable living expenses in year 4,5 if my salary increases...do they still just take the same amount ?


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## epicaricacy (22 Nov 2014)

In the UK, the Income Payment Order increases or decreases dependent on how your circumstances fluctuate thorughout the 3 year IPO period. I'd imagine it's the same in Ireland. In your case, if you get an IPO attached to your bankruptcy, and if your income went up in year 4 or 5 you would end up paying a larger IPO amount from the date when your income increases. The 5 year Income Payment Order is one of the most punitive aspects of the Irish legislation.


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