Law change to see 400 people freed from shackles of bankruptcy
Published 07/08/2011 | 05:00
AN estimated 400 people will be freed from bankruptcy when new laws come into force later this year.
Bankrupts of more than 12 years will be entitled to an automatic discharge from their debt, ending the arcane system which meant the status of bankruptcy could remain until, and even after, death.
The Courts Service has begun reviewing hundreds of bankruptcy files in anticipation of the new laws coming into force in October. Many bankruptcy cases are thought to date back several decades and, in some cases, the bankrupts have died.
Bill Holohan, a solicitor and expert on bankruptcy, said an estimated 400 people who have been bankrupt for more than 12 years will be automatically discharged when the new laws come into force in October.
"Basically what is happening for the first time is that an automatic discharge system is being introduced. If somebody goes into bankruptcy the worst case scenario is that they will be automatically discharged in 12 years," he said. "There are 400 people who will be discharged when the legislation comes into effect later this year."
The new laws will also apply to bankrupts such as Sean FitzPatrick, the former chairman of Anglo Irish Bank. Mr FitzPatrick was declared bankrupt last year with debts of €150m, more than €100m of which is owed to Anglo Irish Bank. His assets were €50m.
The disgraced former bank boss can now look forward to an automatic discharge from what remains of his massive debt 11 years from now in 2022.
Up to now, bankrupts had to apply to the courts to be discharged from bankruptcy, something they could only do after 12 years and only then if their creditors agreed and they had money to pay the costs and fees of the bankruptcy process.
New legislation was introduced by Justice Minister Alan Shatter which reduced the period in which a bankruptcy could be discharged from 12 years to five -- subject to certain conditions -- and introduced an automatic discharge for bankrupts after 12 years.
Mr Holohan said, however, that the 12-year period is still too long and Ireland continues to have one of the longest lasting bankruptcy systems in the world.
"The previous government committed to the EU's Second Chance Policy, which is to converge on three years. We are not even near that," he said.
There are few bankruptcy cases in Irish courts but the numbers are increasing -- 29 people were declared bankrupt last year, compared with 17 in 2009 and eight in 2008, according to figures released by the courts service.