One year bankruptcy is now a reality in Ireland after the Bankruptcy (Amendment) Act 2015 was brought into law by a commencement order on Friday, January 29th 2016.
The commencement order reduced the normal duration of bankruptcy from three years to one year bankruptcy.
A fundamental shift in attitudes
In a press release on Friday, January 29th, the Minister described the Act as “a significant reform 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.”
Family Home implications
The Act, which has been welcomed by the Insolvency Service of Ireland (ISI), in addition to providing one year bankruptcy, also provides for the re-vesting of the family home back to the person who declared bankrupt if the Official Assignee (appointed by the court to satisfy debts from forfeited property of the bankrupt person) cannot sell it within three years. It is critical to do a review of the implications for the family home before making a decision to become bankrupt. One of the issues that might not be obvious is that a family home may increase in value and, therefore, no longer be in negative equity during the currency of the post bankruptcy period.
Further changes coming
The Act also envisaged the abolition of a second court sitting which persons declared bankrupt must attend.
The commencement of this Act is a major step forward for realistic debt relief option in Ireland.
With this Act we have moved on step closer to dealing with the hangover from the demise of the so-called Celtic Tiger.
These changes combined with the flexibility of the Arrangements under the Insolvency Legislation should go a long way towards bringing people back to solvency.