Bankrupts fail to declare holiday homes in bid to defraud creditors
The lengths that people who are seeking bankruptcy protection are going to in order to hide assets have been revealed.
It comes after this publication disclosed that the State's Insolvency Service is probing 210 cases where bankrupts are suspected of hiding assets.
Some are trying to keep cars and properties out of the hands of the bankruptcy officials and their creditors, with others suspected of illegally transferring assets to relations before opting for bankruptcy.
Information on how bankrupts are trying to keep assets from being declared show that one of the preferred scams is to try to transfer a family home or shares to a spouse. This is done in a bid to defraud creditors.
The non-disclosure of holiday homes has also emerged as a big problem for bankruptcy officials, according to the Insolvency Service of Ireland.
Pressed for more details on how exactly dishonest bankrupts are trying to hide assets, the service said another trick being attempted is cashing in pensions and investment policies. The proceeds are then transferred to a brother or sister, dressed up as the repayment of a loan.
But when documentary proof that there is a loan is sought, none can be produced.
Dodgy debtors also attempt to back-date trust documents, claiming assets are held in trust for a wife and children.
One of the leading personal insolvency practitioners in the State, Mitchell O'Brien, said the rules mean bankrupts are not supposed to have transferred assets five years before bankruptcy.
But officials can go back even further if the debtor was insolvent at the time of the transfer.
This was one of the points at issue in the case of bankrupt property developer Sean Dunne in a US court case. The jury found against him and his estranged wife Gayle Killilea over the illegal transfer of some assets to put them beyond the reach of creditors.
A crackdown on dishonest bankrupts led the Insolvency Service of Ireland to take 19 cases back to the High Court last year over what it said was non-cooperation.
The sanctions imposed included extension orders making the bankruptcy term longer. Terms were extended for between 10 months and close to 12 years. One year is the normal bankruptcy term.