Bankruptcy cases to flood new insolvency service
A pent-up demand for bankruptcies in Ireland is expected to clog up the personal insolvency service when it is finally launched at the end of March.
Sources involved in the process say the demand for bankruptcy settlements is already building and dealing with these will take precedence over the other areas of the personal insolvency regime.
"We expect to be dealing with bankruptcy cases for the first number of months. There is huge demand in this area, a lot of people waiting for the service to be launched," a source told the Irish Independent.
According to the Department of the Taoiseach, the State is anticipating 3,000 bankruptcy applications in the first full year, but this is expected to rise significantly. The new regime will see the bankruptcy period in Ireland being reduced from 12 years to three.
It will also establish a state-run insolvency service intended to help people manage their debt. The Government has approved an initial staff of 80 for the service, while eight Circuit Court judges will be allocated to deal with indebted individuals.
However, worryingly, the Department of the Taoiseach has said that its IT frameworks to deal with the applications would not be up and running until the second half of 2013.
Last week, the EU Commission warned that new personal insolvency laws could see the focus placed on "big-ticket" mortgage cases at the expense of smaller, hard-pressed homeowners in greater distress.
Officials reiterated their concern that debts of up to €3m could be written off under the Personal Insolvency Legislation, claiming the figure appeared to be "unduly high".
Pointing out that the average mortgage debt is about €300,000, the document said that banks, lawyers and insolvency practitioners could focus on high-end cases rather than those with smaller mortgages.