Due to economic forces beyond ordinary people’s control, the rate of personal insolvency has risen in Ireland at an alarming rate. If you are facing personal insolvency, you will probably be feeling very anxious and upset about the situation you have found yourself in. You will also have a number of questions that you need answering, such as:
- How do I go bankrupt?
- Are there any alternatives to bankruptcy?
- How should I deal with insolvency?
- Are there any creditor remedies available to me?
Insolvency and Bankruptcy in Ireland
Gibson & Associates’ personal insolvency specialists have developed a unique asset protection plan to overcome insolvency issues. Get in touch today to discuss this unique solution with one of our experts. Our personal insolvency solicitors will offer your advice and guidance during this troubling time, helping you to deal with your personal insolvency.
Your Personal Insolvency Options
When it comes to personal insolvency, you have two main options open to you. Either you can declare bankruptcy, or you can seek to avoid declaring bankruptcy. This choice is hugely important – by having two options, each with unique advantages, you are given a much easier path to getting back on your feet.
Since 2012, the law has started to become kinder to people who have to declare bankruptcy in Ireland. However, it is still not always the best option available to you, and you may be able to find a better way of managing your insolvency without having to declare bankruptcy.
Many people interpret insolvency in the exact same way as bankruptcy, and while it is true that they can go hand-in-hand, they don’t have to.
Gibson & Associates personal insolvency solicitors are particularly skilled at handling insolvency so that you never have to declare bankruptcy, and can avoid having a creditor issue a bankruptcy order against you. We help you to avoid bankruptcy with a combination of expert advice and guidance and a unique and pragmatic approach that helps you to solve the problems you are personally facing.
Common methods to avoid bankruptcy include:
Mortgage Write-Downs & Mortgage Write-Offs
If you are struggling to meet your mortgage repayments, we understand how worried you will be. The burden of financial debt is always extremely stressful, and this will be all the more troubling if your home could be repossessed.
However, there are ways to limit this debt, as it may be possible to obtain a mortgage write down or even a mortgage write-off.
If the sale of your home is not enough to cover the cost of your mortgage repayments, the debt will not automatically be forgotten about – you will still owe your bank or mortgage lender the outstanding sum of money.
Unfortunately, this problem is widespread in Ireland, as many homeowners have found themselves in negative equity. This has led to dire financial difficulties for a lot of households who have fallen into mortgage arrears, and yet are not able to generate enough capital from the sale of the property to climb out of debt.
But there are solutions available, one of which is a mortgage write down. This is when your mortgage lender agrees to write off part of your debt. You will then have to pay the outstanding amount, either as a lump sum, or through regular instalments.
A solicitor who specialises in personal insolvency will be able to make this request on your behalf, helping to reduce the value of your loan to a more manageable sum.
In some exceptional circumstances, it may even be possible to secure of mortgage write-off, where your mortgage debt is written off entirely. This is open to people who are in a difficult situation which is unlikely to improve in the future.
At Gibson & Associates, we can assist you with this application, collating the necessary evidence to prove that you are eligible for a mortgage write-off.
Debt Write-Downs & Debt Write-Offs
Debt write-downs and even debt write-offs can be an option for many individuals facing personal insolvency. Find out whether you could benefit from a debt write-down or debt write-off today by getting in touch with us at Gibson & Associates Solicitors.
Write-down debt is when your creditors (meaning the people you owe money to) agree to reduce the size of your debt. This may reduce the value of an asset, but at least it does not eliminate it entirely, as bankruptcy will do.
Furthermore, debt write-down limits the balance of your outstanding debt to a more manageable total. This can be paid as a lump sum or in regular instalments, depending upon the terms of the agreement.
As experts in personal insolvency solutions, we can request a debt write-down on your behalf, negotiating with your creditors to reach a mutually acceptable arrangement.
Alternatively, it may be possible to ask your creditors to write off your debt entirely. Debt write off in Ireland is a suitable option for those who are in a difficult situation that is not going to improve. This might include, for example, someone who has a very low income or who cannot work due to a medical condition.
Creditors often want an independent advisor to make a debt write off request on your behalf. A solicitor from our insolvency team can help you with this, collecting any evidence (such as medical evidence) that may be required and putting forward a strong case. If a debt write off is obtained, we will ensure the agreement is put in writing, protecting your position in the future.
Your Options For Debt Write-Offs And Debt Write-Downs
Debt Relief Notice
The Debt Relief Notice is one of several Irish personal insolvency options that was introduced in order to offer people who have become insolvent a degree of protection from creditors. Its most important feature is that it allows up to €20,000 in unsecured debt to be written off or dramatically reduced.
You will be supervised for three years if you’re successful in obtaining the Debt Relief Notice. If your disposable income becomes more than €60 during this 3 year period, you will need to surrender extra money to your creditors.
However, after the three-year supervisory period, you will be released from all debts.
Debt Settlement Agreement
A Debt Settlement Agreement, or DSA, can only be used on unsecured debt. There is no limit on the amount of debt that can be subject to a Debt Settlement Agreement, but the creditor must agree any DSA.
You need to use to a PIP (Personal Insolvency Practitioner) to apply for a DSA, and you are expected to pay your creditors as much as possible to obtain a discounted debt.
DSAs are normally arranged over a five-year period, sometimes six years. Following this period, you are released from all debts.
Personal Insolvency Agreement
Personal Insolvency Agreements, or PIAs, can be used for secured debt as well as unsecured debt. A PIA extends over six years, sometimes seven years in special cases. There is a high limit of €3 million of secured debt, and creditors must agree to the Personal Insolvency Agreement.
As the name suggests, in order to apply, a Personal Insolvency Practitioner is required. You are released from all debts after the three-year period.
We understand that it is not easy to accumulate assets. So when you do, you will be proud of what you have achieved and want to hold on to the wealth you have worked to acquire. You certainly do not want personal insolvency to result in your losing all your assets.
Need Help Protecting Your Assets?
Protecting assets isn’t an exact science; instead it will depend on you and your individual circumstances. That is why you need to speak to a specialist solicitor about protecting assets, as this will provide you with an authoritative view upon how best to limit your liabilities.
At Gibson & Associates we have a wealth of experience in asset protection, and will be more than happy to provide you with expert legal advice. We have developed a unique asset protection plan that can be tailored to your individual situation.
After taking the time to understand you and your objectives, we will explain the various ways in which you can protect assets and safeguard your possessions, ring-fencing them for you and your loved ones to enjoy. We will then help you implement these strategies, using our knowledge and experience to maximise the value of your estate.
If you’re considering declaring Bankruptcy in Ireland, there is understandably a lot of research to do to ensure you have fully understood the process, the repercussions and any alternatives that might better suit you. However, Irish debt solution regulations have undergone many changes in the last few years, and most recently, months, so it’s important to ensure you’re up to date with the changes.
The recent changes in bankruptcy and debt solutions have muddied the waters in an already complicated area, so we’ve put together some information to help give you an overview of Bankruptcy in Ireland and the alternative options available. Although it may seem daunting, there have been many positive changes that could make your situation much easier to cope with.
In fact, before you can even declare yourself bankrupt in Ireland you need to prove that no alternative solutions were viable for you.
If the routes highlighted above don’t prove to be practical solutions to your debt, you may decide that Bankruptcy is the best option for your financial situation.
Bankruptcy in Ireland is “the settlement of debts of something who is wholly or partially unable to pay off their debts.” Undertaking the act of Bankruptcy will allow the court official of the Official Assignee in Bankruptcy to distribute your assets fairly between your creditors and offer you protection from them.
Declaring Bankruptcy in Ireland:
There are two ways to go Bankrupt in Ireland.
- You can declare yourself Bankrupt
- Your creditors may petition for you to become bankrupt.
Things to bear in mind when it comes to Bankruptcy in Ireland
- If you’re applying to declare yourself Bankrupt, the process isn’t free. You must lodge an initial €200 towards the costs of the process. For financial advice on Bankruptcy in Ireland and other issues surrounding debt advice, the Money Advice and Budgeting Service offers some exceptional resources.
- Once you are declared bankrupt all your assets are sold by the Official Assignee to pay your creditors. The change back in December 2013 allows you to keep up to €6000 of ‘excluded’ assets such as furniture, clothes and necessary items for those dependent on you. This was increased from €3,100.
- The court may use your salary or pension for the benefit of your creditors.
- Assets you gain after you become Bankrupt (such as inheritance) may still be seized by the court for the benefit of your creditors.
- Your family home, whether it’s owned jointly or by you alone, can only be sold by the Official Assignee if the court gives prior permission. The Court may postpone the sale of your home after weighing up the interest of your creditors and your family.
Recent Changes in Bankruptcy Legislation
There have been many changes to Irish Bankruptcy laws over the last couple of years. These alterations signify change for those who are already declared bankrupt, and those who face bankruptcy in the future.
In December 2013, the bankruptcy legislation dramatically changed, resulting in the time period of bankruptcy reducing from 12 years to only 3 years. As of January 2016, this was reduced further to 1 year, as well as the changes to other Bankruptcy legislations.
Further information about the most recent Bankruptcy legislation (amended & signed in December 2015 and introduced January 2016) are listed below:
- You are deemed bankrupt for one year. In 2016, those who are declared bankrupt are now only deemed bankrupt for 1 year. In 2013, the time period of which a bankrupt person was declared bankrupt was 3 years, and prior to that, it was 12 years. For those who have been bankrupt previously and have served three or more years on their bankruptcy must only serve an additional 6 months.
- The ownership of a bankrupt person’s home is returned to them after 3 years. The amended Bankruptcy Act 2015 permits that ownership of your home is re-vested in you 3 years after you have been adjudicated bankrupt, depending on any outstanding mortgage. (Although there are some exceptions)
- Income payment orders/agreements will last 3 years. These are any of the pre-negotiated payments you need to make, and they will stop after 3 years. This was previously 5 years. (This is not applicable in cases of non-co-operation or concealment of assets)
- Bankruptcy can be extended in cases of Non-co-operation or Concealment of Assets. This means that you are liable to be declared bankrupt for longer than the one-year period if you do not co-operate with your specific terms of bankruptcy, or if you attempt to hide or conceal other assets in your name.
- The person in debt must show that they have made reasonable attempts to settle their debt. Bankruptcy was once the only option for those struggling with severe debt problems. However, the introduction of the aforementioned alternatives has given more flexibility to people.
The following change isn’t recent, but it’s still very relevant to those who are declaring bankruptcy.
- Posting notice of bankruptcy on the ISI website. An added expense of the bankruptcy process was the legal obligation to announce your bankruptcy in the newspapers. This would incur an advertising fee. However, recent changes allow for bankruptcy announcements to be posted on the ISI website free of charge.
The Difference Between Bankruptcy & Liquidation (Other Insolvency options)
Bankruptcy and liquidation are the last resorts in paying off creditors and dealing with debt for individuals or businesses in financial difficulty. However, many are unsure of the differences between the two legal processes.
An individual in extreme financial difficulty can petition the court for bankruptcy to gain immediate financial relief and to avoid legal action against them from creditors. Bankruptcy can be initiated by a creditor or a debtor. If a creditor applies for a debtor’s bankruptcy, the debtor must owe the creditor at least £750 in order to proceed with the bankruptcy process.
The individual’s assets will be assessed and sold to pay off the debts. If the debtor’s assets do not cover the amount of debt owed to the creditors, a split may be made on a percentage basis.
A bankruptcy petition must be filed at a county or court or the High Court in London. The court will decide whether or not the bankruptcy petition is successful.
An Official Receiver will be appointed to process the bankruptcy if the court grants the application. The Official Receiver is responsible for protecting the debtor’s assets during the investigation into their finances.
Liquidation differs from bankruptcy in the sense that the business cannot be resuscitated, whereas an individual can make a fresh start after becoming bankrupt.
While creditors can petition the court for a business’s liquidation, a business can enter liquidation voluntarily.
The business will be taken care of by an administrator who will work to try and salvage the financial situation of the business. A creditor may apply to wind up the company. If this occurs a liquidator may be appointed to be responsible for the deregistration of the company.
A liquidator will also collect and sell the company’s assets. If there are not enough funds to pay off the creditors, each creditor will receive a payment proportionally divided between them.
Capital will only be returned to shareholders if there are surplus funds. In all cases, the costs of the liquidator are met first.
Getting Bankruptcy Support & Advice
Going through a debt crisis can be incredibly overwhelming. However, the new legalisations are designed to make the both the process and the aftermath easier to cope with and manage. Whether you’re suffering personal or business debt, there are now solutions aimed at solving your debt problems.
Gibson and Associates can provide both advice and services to ensure the process goes smoothly.
Frequently Asked Questions
Find our answers to personal insolvency questions below:
What is the point of bankruptcy?
Choosing to become bankrupt, or being made bankrupt, is how people who cannot pay all or part of their debts can attempt to fairly settle their debts. The various things that someone owns in the event of bankruptcy will be distributed amongst their creditors as fairly as possible. Bankruptcy laws vary in severity from country to country, and bankruptcy in one country may not be recognised in another (although bankruptcy usually will be recognised across borders within the EU, and you can be arrested if the High Court suspects you are trying to escape the consequences of your bankruptcy).
What happens when I seek to declare bankruptcy?
When you declare bankruptcy in Ireland, you must lodge a fee with the court official who deals with bankruptcy, the “Official Assignee”. You must then complete various documents, including your petition, a sworn affidavit, and a sworn statement of affairs, and get these documents stamped. You must then file your documents at the Examiner’s Office, and attend a court date, after which, if you succeed, a judge will adjudicate you bankrupt.
What happens when I successfully declare bankruptcy?
If your declaration of bankruptcy is successful, you must complete an interview with the Official Assignee or Bankruptcy Inspector, and place notices of your High Court sitting in Iris Oifigiúil and on the Insolvency Service of Ireland’s website or in a national newspaper. You then need to attend your High Court Sitting in order to notify your creditors of your bankruptcy. When your bankruptcy begins, you are technically free of debt – but you will no longer own your assets, either. You may retain assets including clothes, necessities and furniture up to a value of €6,000, but your Official Assignee will sell off all other assets. If you acquire new assets during this time, your Official Assignee will claim them and sell them. However, in certain circumstances you may be able to retain your family home. You will also pay the Official Assignee a certain amount of your income, which will go towards discharging your debts.
What are the non-financial consequences and ramifications of being bankrupt?
Firstly, you will appear in the Bankruptcy Register until such time as your bankruptcy is discharged. Anyone can check this register, and you need to remember that you are on it – failing to disclose that you are bankrupt can count as a criminal offence. Once discharged, you will remain on the register as a discharged bankrupt. Once you have been declared bankrupt, you cannot act as a director, manager, auditor, liquidator or receiver of a company unless you receive permission first from the court. You cannot be a trustee of a charity if you are adjudicated bankrupt under any circumstances. You should not travel outside the State without telling your Official Assignee, and may be arrested if you attempt to do so. Finally, you cannot receive an enduring power of attorney, and if you already do it will be revoked.
Can I apply for bankruptcy before I attempt to apply for personal insolvency?
No. You must make an effort to apply for personal insolvency before you are able to apply for bankruptcy. Ultimately, your creditors will be consulted to see which option is best.
Am I eligible for personal insolvency?
For the DSA, you must have lived or had a business within the Republic of Ireland at some point, and you cannot have incurred more than a quarter of your debt in the last six months. For the PIA, all of the above applies in addition to which you must have co-operated with the MARP, or Mortgage Arrears Resolution Process, for six months without being able to come to an alternative arrangement with your creditor.
Will I be able to keep my home if I am insolvent?
This depends on your circumstances to some extent. If you are forced to declare bankruptcy, or bankruptcy is the best option for you to take, you still stand a chance of keeping your home if you have a family. This depends on a number of details about your situation, how much you need to pay your creditors, and the situation of your creditors. On the other hand, if you can come to a Personal Insolvency Arrangement, you stand a much better chance of keeping your home. Where it is reasonable, and where you want to keep your home, your Personal Insolvency Practitioner is obligated to formulate a proposal that does not involve you selling your home. It may not be possible for you to keep your home in all circumstances, but expert help from insolvency professionals could make the difference.
Can I save money if I am insolvent?
If you are insolvent, you will be allowed a figure based on research carried out by the Vincentian Partnership for Social Justice in order to meet a minimum living standard. This takes into account your various circumstances, including the number of people who rely on you, and allows money to be used for savings, contingencies and insurance policies as well as on conventional expenses. The amount allocated is small, but you will be able to save a modest sum to protect you and your family in the event of things going wrong.
How can I come to a personal insolvency arrangement?
Depending on your personal situation, a PIP will take you through a personalised strategy depending on your specific situation.
Why Choose Gibson & Associates?
Solicitors offer a lot of advantages over heading straight to a personal insolvency practitioner. Where a personal insolvency practitioner will only look at the numbers involved, Gibson & Associates look at the issues that led to you becoming insolvent in the first place, and take these into account.
In some cases, this could invalidate the debt and even result in the return of money to you – in the event of, for example, reckless lending or fraud, it is possible that you should never have been in debt in the first place, and we can help sort out and resolve the situation in your favour.
Our team of Insolvency solicitors can work with you to get a great plan in place, working towards a solution that you can be genuinely happy with. Read our case studies to see how other people have benefitted from our unique service, or contact us to start working towards a brighter future today.