Key Post A DIY bankruptcy guide - contributors wanted!

Brendan Burgess

Founder
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This is a work in progress - take professional advice before acting on anything in this thread
I have no first hand experience of this, so I am compiling this from my research. I would welcome any corrections or questions.

Consider first if Irish bankruptcy is right for you...
Would a Personal Insolvency Arrangement or a DSA be better?
Will you lose your job if you go bankrupt?
Would UK bankruptcy be a better option?
How will your partners and family be affected - joint owner of your properties; guarantors of your loans


First of all, do you qualify for bankruptcy?




  • You must be have at least €20,000 of creditors in excess of debtors.
  • You must swear that you have made a reasonable effort to reach an appropriate Personal Insolvency Arrangement or Debt Settlement Arrangement
  • The Court may adjourn the hearing to allow you an opportunity to enter into a PIA or a DSA.

Preparatory work
Hold off payment of your creditors to build up around €3,000 to fund the bankruptcy

Be very careful about whom you pay or you could be accused of showing preference to certain creditors.

Get your lenders' agreement to sell your properties - bankruptcy will be simpler if there are only unsecured debts

If you own a property with someone who will not be going bankrupt, enter into discussions with the lender about sorting this out now. After your bankruptcy, your partner will be responsible for the whole mortgage on their own. You might as well sell them your interest in it, or transfer the negative equity now.

If you have a guarantor on your mortgage, speak to them now.

Tell your creditors you will be applying for bankruptcy - try to get their agreement to an informal settlement first

If you can't get an informal agreement, try for a Debt Settlement Arrangement

If you can't get a DSA...

Step 1 - Get a Personal Insolvency Practitioner to issue a statement that a PIA or DSA has been impossible or is unlikely to work - Fee €1,000
Step 2 - Apply to the Circuit Court on Form... Fee €650
Step 3 - Place an ad (on the Insolvency Service website?)
Step 4 - Attend the court on the appointed day
Step 5 - The Judge will adjudicate you a bankrupt (or the judge may refuse or may adjourn)
 
Frequently Asked Questions

What factors will the judge consider when adjudicating me a bankrupt?

I am in heavy negative equity, but I can pay my repayments. Is bankruptcy a solution?

Can a creditor object?

The mortgage lender says that I was not co-operating - will that affect my chances?

Is it ok to keep my Credit Union account secret?

What happens to my pension fund/ pension/ARF in bankruptcy?

How much will I be allowed to live on while bankrupt?

Can I exit the bankruptcy before the three year period?
Yes, if you pay all preferential creditors, pay all the costs, and get the approval of your creditors.
 
Useful links


[broken link removed] Steve Thatcher has answered many questions for Askaboutmoney users on bankruptcy in the UK and Ireland.

Irish Bankruptcy Guide - Neo Financial Solutions A comprehensive 25 page article on the topic. (I have not read it yet, so I can't comment on its quality)


[broken link removed]

from Terry Gorry & Co Solicitors



The Insolvency Service of Ireland Guide to Bankruptcy
 
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.”.
 
The Minister has not commenced the legislation, so you can't apply for bankruptcy yet...

But you can start the preparatory work.
 
Brendan Burgess said:
You must swear that you have made a reasonable effort to reach an appropriate Personal Insolvency Arrangement or Debt Settlement Arrangement
)
Click to expand...

This key post is a great idea. Should have matching ones for the PIA etc.

Comments: What is a reasonable effort, what if are more suitable for a PIA but you cannot apply for it as you cannot pay a PIP.

Is it legit to hold off 3K from creditors to pay for bankruptcy, I guess it must be ok.

You talk as though the bankrupty has to decide who they pay, does the bankrupt run the show? That's doesn't seem right.
 
Bronte said:
Should have matching ones for the PIA etc.
Click to expand...

Hi Bronte. The point of this one is to show how someone can apply for bankruptcy on their own without a solicitor. You can't do a PIA without a PIP. But a Key Post on the PIA process would be useful.

Comments: What is a reasonable effort, what if are more suitable for a PIA but you cannot apply for it as you cannot pay a PIP.
Click to expand...
You will need about €2,000 up front for a PIA. It will only be suitable for people who have some income, e.g. multiple investment properties, so they should be able to come up with the initial costs.

Is it legit to hold off 3K from creditors to pay for bankruptcy, I guess it must be ok.
Click to expand...

I think it is. You will need €3k but you won't have it if you pay your creditors.

You talk as though the bankrupty has to decide who they pay, does the bankrupt run the show? That's doesn't seem right.
Click to expand...

That is under the heading "preparatory work". In the run up to a bankruptcy, don't pay off your Credit Union loan ahead of schedule. After the bankruptcy, the OA will decide who gets paid.
 
Questions:

Once declared bankrupt by the court is it possible to relocate to another country (outside of the EU) to live with family during the 3 year bankruptcy?

If so, can you look for employment in that country during the 3 years?

The above questions are relevant as; I would lose my house (in negative equity) so no where to live, I have no job and little prospects of getting one, have family living outside of EU where I could stay and possibly find some work.
 
One of the FAQs relates to pensions and bankruptcy.

  • Pensions in payment will be treated as income, i.e. they will vest in the assignee.
  • If you have an entitlement to a pension benefit, that will be treated as if you have the benefit. So if you are of an age where you have the option to draw your pension, then the pension will form part of your income, even if you haven't actually started drawing it yet.
  • If you made "excessive contributions" to a pension arrangement in the three years prior to applying for bankruptcy, a court can decide that such contributions can be refunded and used to pay your creditors. This is to avoid younger people putting funds out of reach of creditors by putting them into a pension scheme. The act sets out what would be considered "excessive".
 
Brendan Burgess said:
The Minister has not commenced the legislation, so you can't apply for bankruptcy yet...

But you can start the preparatory work.
Click to expand...

My understanding of this is that you can apply to be adjudicated bankrupt and can go bankrupt. On the commencement of the bankruptcy reform provisions the term of bankruptcy will be reduced to three years. This will have retrospective effect so there is no advantage to be gained by holding off until commencement.
 

Hi DebtCert

It will be in the Circuit Court which will be easier and cheaper.


If it's not urgent, it's probably worth waiting.

Brendan
 

I haven't heard about the statement from the PIP, I thought the sworn statement was all that's required. Is this mentioned anywhere in the legislation?
 
Brendan Burgess said:
Hold off payment of your creditors to build up around €3,000 to fund the bankruptcy
Click to expand...
My understanding is that it will cost less than €1500, without legal representation, once the new legislation is enacted.
€650 court fees + €550 advertising costs + €100 stamp duty on court documents. Is there any additional costs?
 
P.T said:
The above questions are relevant as; I would lose my house (in negative equity) so no where to live, I have no job and little prospects of getting one,
Click to expand...

You may not neccasarily lose your house, especially is it's your family home and in negative equity.
Chris Lehane, who is heading the ISI said: "not necessarily true" that a person would lose their family home as a result of being bankrupt and "it just depends on each individual circumstance"
 
Brendan Burgess said:
Hi DebtCert

It will be in the Circuit Court which will be easier and cheaper.


If it's not urgent, it's probably worth waiting.

Brendan
Click to expand...

I didn't know that but it certainly is very interesting. Can you direct please me to the provision concerning bankruptcy petitions in the Circuit Court? That will be a big change.
 

You have to go through the sham of seeking a PIA/DSA first which costs the big bucks of around another 1000 there.
 
Time said:
You have to go through the sham of seeking a PIA/DSA first which costs the big bucks of around another 1000 there.
Click to expand...

I know signing a sworn statement is necessary stating that you have tried the alternatives but I have not come across any information regarding paying a PIP for a proposal that will surely not work. Where is this in the legislation?
I had an initial consultation with a PIP which was free of charge. I'm currently unemployed, no assets and have debts of approx. €500k to various creditors. Immediately, as I expected, he was able to rule out a PIA as there is nothing to give. He recommended bankruptcy and didn't mention any further dealings required with him. I then contacted the Official assignees office and confirmed the criteria to adjudicate myself bankrupt. Both the PIP and the Assignees office were very helpful and at no point did either of them mention having to go through the motions of a PIA/DSA.
The only barrier at the moment to me is that you need €1900 of realisable assests and I have none. Once Part 4 of the new act is implemented this will be reduced to €0. I have been told that it's expected in the next month or so.
 
That is good to hear.

I was told when the new legislation came into being that you had to exhaust all other options first before going to court. This meant seeking other reliefs such as DSA/PIA etc and the associated fees involved.

Great to hear that you only need an initial free consultation.
 
I have an email from the official assignee office, I was asking about DIY bankruptcy. Is it ok to post up the text here? Just to give some info for anyone who is planning on going ahead with it? There's not a lot of info different to what has been posted but it will be a little bit more that could help? ps, I am not posting the email, just the text of the info.
 
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