An order bringing into force the new lower bankruptcy term ( from the Latin bancus meaning bench and ruptus meaning broken – moneylenders signified they were out of business by breaking the table they traded on..) was today signed by the Minister for Justice and Equality Frances Fitzgerald. This reduces the term from three years to just one year.
Under the new legislation, the term bankrupts have to make income payments to the official assignee has also been reduced from five years to three years. If a person is made bankrupt and the official assignee has not made orders for the sale of the family home within three years of the bankruptcy, the home can be re-invested with the family.
Those declared bankrupt before August 2013, will still not be discharged for three years but those declared bankrupt between then and August last year will be discharged in July this year.
John Lowe the Money Doctor stated “This will certainly move those entrenched creditors to providing a solution sooner rather than later. It is about time those who through no fault of their own other than bad timing, were allowed to get on with their lives, dust themselves down and rejoin the working population to contribute to Irish life with a new incentive.”
The act however also contains a provision allowing for bankruptcy to be extended to 15 years for some people who do not cooperate, or who try to conceal assets or income and also gives new powers to the official assignee in bankruptcy among other reforms.
Ms Fitzgerald said: “The act is a significant reform of our bankruptcy laws and reflects a fundamental shift in attitudes towards indebtedness. Our legislation no longer punishes people who, in most cases, through no fault of their own find themselves with intractable debt.” She added “However, bankruptcy is still not going to be an easy option. People seeking bankruptcy will have to co-operate in an open manner with the bankruptcy process, and hand over their income and assets towards repayment of their debts.”
The Insolvency Service of Ireland has welcomed the new legislation. Director Lorcan O’Connor said: “The reduction in the bankruptcy term means that there has never been a better time to take the first step to solvency and a fresh start.” while David Hall of the Irish Mortgage Holders Organisation said “This represents a revolutionary change for those struggling to deal with unsustainable debts and unreasonable creditors. For the first time debtors have a mechanism to free themselves from creditors quickly and start anew.”
