02 Jul The Bankruptcy Act 1988
Adjudication as a Bankrupt: Bankruptcy law in Ireland is governed by the Bankruptcy Act of 1988. Under this Act, a person owing money (the “Debtor”) could be adjudicated bankrupt on foot of one or other of eight different acts of bankruptcy. In practice, the most common acts of bankruptcy are (a) failure by the bankrupt to satisfy a bankruptcy summons within 14 days of service upon him, or (b) judgement being obtained against him. Until recently the person who is owed the money (the “Creditor”) also had to show that the sheriff had returned a Nulla Bona (No Goods). Following a recent Supreme Court decision, the creditor no longer has to wait for the Sheriff to make a return of No Goods.
Time Limit for Appeal: Once the petition to have a debtor made bankrupt is served on him, the debtor generally has a period of only 3 days within which to file an appeal against an Order of Bankruptcy.
Assets including future assets/windfalls used to pay debts: Once the Court declares a debtor to be bankrupt, all of his assets vests in the Official Assignee in Bankruptcy and the bankrupt no longer has the power to deal his assets. Crucially, the bankrupt is required by law to declare any property including inheritances or other windfalls which the bankrupt acquires after being adjudicated bankrupt and all such windfalls, etc., will also vest in the Official Assignee.
Twelve Year Term: Once declared bankrupt, the debtor will remain in bankruptcy for twelve years except in the unlikely situation that he is able to discharge his debts, including the costs of the bankruptcy. At the end of the 12 year bankruptcy period, he may be discharged from bankruptcy. Whilst bankrupt, the debtor will only be allowed to keep a certain amount of his earnings for himself, which sum will be determined by the Court depending on his personal/family circumstances. The rest of his earnings will be “attached” i.e. used towards the payment of his debts. He will not be allowed to be a director of a company, not have any involvements in the management of a company unless the Court permits, nor will he be allowed to hold an elected public office.
No Advantage for the Creditor: From the creditor’s point of view, bankruptcy is also an unattractive option. If, for instance, a Bank wished to have a borrower made bankrupt, the Bank will have to pay the costs of the application, but will not gain any preferential position for itself having done so. The Revenue Commissioners and other preferential creditors will have the first call on the available assets, following which the remainder will be distributed amongst the other creditors.
The bankruptcy option may yield little or no benefit to the creditor while essentially operating as a barrier to the financial recovery of the debtor. It is therefore to the benefit of both the debtor his creditors if a mutually acceptable solution can be agreed between them.
The above is intended as general guidelines only. Personal circumstances vary considerably from one person to the next. If you are facing the threat of bankruptcy you should take appropriate advice from your professional advisors as to the most appropriate steps for you to take in light of your own particular situation.
No Comments