| 8.5°C Dublin

Lawyers prepare to tackle debt law

A LEGAL challenge to Ireland's arcane bankruptcy laws may be made to the High Court within weeks.

The challenge is being considered by lawyers acting for clients who are struggling to repay their debts and are facing bankruptcy proceedings.

It is believed that senior barristers have been consulted for their legal opinion. One source said a potential challenge could be imminent. If it proceeds, it is expected to focus on alleged breaches of the constitutional rights of the person facing bankruptcy.

Volunteers with New Beginning -- a group of lawyers who act for free in cases involving the repossession of family homes -- are also thought to be involved.

Ireland's bankruptcy laws have been widely criticised as too punitive and excessive. Bankrupts are subjected to 12 years of harsh restrictions.

All their property and assets are transferred to a signee, who distributes the proceeds to the creditors.

They must notify the signee when they plan to leave the country and of their business affairs. They cannot receive loans of more than €650, cannot be a company director and cannot hold electoral office.

The Law Reform Commission has recommended root and branch reform of debt management and enforcement, with a new non-court-based scheme to allow people try to settle their debts outside of the courts.

The Government has promised to reform the bankruptcy laws, but any potential changes will be too late for those facing imminent bankruptcy proceedings.

Irish laws contrast with those in the UK, where a person can discharge their bankruptcy within a year. That has led to what experts have called "bankruptcy tourism", with cash-strapped Irish developers declaring themselves bankrupt in the UK to avail of its more lenient system.

Sunday Independent