Bankruptcy law in Ireland is now, broadly speaking, in line with that of the United Kingdom.
In particular, for bankrupts who cooperate with the bankruptcy process:
- bankruptcy will end in one year; and
- their interest in their family home will re-vest in them after 3 years.
Notably however, the courts will have discretion to extend the period of bankruptcy for up to 15 years for non-cooperative individuals and those who have concealed or transferred assets to the detriment of creditors.
Minister Fitzgerald, Minister for Justice and Equality, signed an order commencing the Bankruptcy (Amendment) Act 2015 (the "Act") into law on Friday 29 January 2016 (the "Commencement Date"). The Act makes a number of significant amendments to the Bankruptcy Act 1988 (as amended) (the "1988 Act").
Term of bankruptcy
The Act sets a new default term of 1 year from the date of adjudication.
Existing bankruptcies on the Commencement Date will be discharged as follows:
- if due to expire within 6 months of the Commencement Date, on that assigned date; or
- if due to expire more than 6 months after the Commencement
Date, on the later of:
- 6 months after the commencement date; or
- one year from the date of the adjudication.
Where a bankrupt has:
- failed to co-operate with the Official Assignee; or
- concealed assets, or income from, or failed to disclose assets, or income to the Official Assignee, which could have been realised for the benefit of creditors
the court may, where it considers it just, on the application of the Official Assignee (or a creditors' trustee where appointed), make an order substituting a date, up to 8 years from the date of adjudication for the date on which the bankruptcy would have expired.
Similarly, in more serious cases, this term may be extended to 15 years where the court considers it just to do so.
Recognition of civil partnerships and cohabitants
The 1988 Act has been amended so that a court order is required before the Official Assignee can sell:
- a family home (i.e. a dwelling in which a married couple ordinarily reside) of the bankrupt, or the bankrupt's spouse; or
- a shared home (i.e. a dwelling in which the civil partners ordinarily reside).
Re-vesting of family homes/shared homes/principal private residences
The default position is that, unless the Official Assignee has taken steps within 3 years of the date of adjudication, the bankrupt's interest in family homes, shared homes and principal private residences will re-vest in the bankrupt on the third anniversary of the date of adjudication without the need for any conveyance, assignment, or transfer.
This re-vested estate or interest remains subject to any mortgage.
Bankruptcy tourism, which, in recent times, has increased in popularity among Irish citizens seeking to avail of the more attractive regime in other countries, should largely become a thing of the past.
In this regard, the Act is balanced in its approach – it assists cooperative debtors while also providing sanctions with significantly extended terms where debtors seek to abuse the process.
Consequently, future attempts by Irish citizens to declare bankruptcy in other jurisdictions may in certain cases be cause for suspicion amongst creditors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.