One-year bankruptcy now in effect following order to lower term
THE new one-year bankruptcy term has come into effect, in a move that debt campaigners said was “revolutionary”.
Minister for Justice and Equality Frances Fitzgerald signed an order bringing into force the new lower bankruptcy term.
The move reduces the term from three years.
Under the new legislation, the time people who are bankrupt have to make income payments to the official assignee, the State official who handles the process, has also been reduced from five years to three.
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.
People 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.
However, the act 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.
The act also give 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.”
But she warned: "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.”
David Hall of the Irish Mortgage Holders Organisation said the move was “revolutionary”.
“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,” he said.