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What is Bankruptcy?

Bankruptcy involves a formal legal process in which a person who is insolvent applies to the High Court for a Bankruptcy Order to resolve serious debt problems. It results in the transfer and sale of a person’s assets in order to release cash for creditors.

It is one of a range of debt solutions available and is a potential option for individuals whose debts (including secured debt such as mortgage debt and unsecured debt such as bank loans or credit cards) amount to more than €20,000.

When a person obtains a Bankruptcy Order, their property is transferred to the Official Assignee in Bankruptcy who is responsible for selling it and distributing proceeds to creditors.

There have been major changes in bankruptcy rules for the benefit of people who follow this route, including a reduction in the duration of bankruptcy to three years from 12. The Insolvency Service of Ireland has also significantly reduced the cost of entering bankruptcy to approximately €270 from €1,400.

There are key legal and administrative stages involved in bankruptcy and the Insolvency Service of Ireland recommends seeking professional advice before choosing this route.

Our experts are fully-qualified to review your situation, explain your options, help you decide whether bankruptcy is the best option and guide you through the process. 

Please contact us today for friendly expert advice with no-upfront fee.

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Key features-at-a-glance

  • Bankruptcy involves a legal process to obtain a Bankruptcy Order
  • It can be applicable if secured and unsecured debts exceed €20,000
  • It involves ownership of property being transferred to Official Assignee and sold
  • All your debts are written off at the end of the bankruptcy
  • You will normally be discharged from bankruptcy after three years
  • You may be liable to make payments towards your debts for up to 5 years
  • Obtaining advice from a Personal Insolvency Practitioner (PIP) is recommended

In This Guide

How does bankruptcy work?

Step one - Consult a PIP and discuss your options

Gather your financial information together and arrange for a consultation with a Personal Insolvency Practitioner. Your PIP will make an expert assessment of your situation and advise you on the full range of available debt solutions, including bankruptcy but also other government-approved solutions: a Debt Relief Notice (DRN), Debt Settlement Arrangement (DSA) and Personal Insolvency Arrangement (PIA).

Your PIP will help you to complete a Statement of Affairs giving a comprehensive account of your financial situation including how much you owe and to how many creditors, and also your assets, income and expenditure. It will also specify which assets are owned solely by you and which are jointly-owned with a partner or spouse.Your PIP will provide details of all fee arrangements and costs involved in applying for bankruptcy.

Step Two - fill out the legal paperwork and pay fee to ISI

If you decide to go ahead with applying to be made bankrupt your PIP will help you obtain and complete all of the required documentation. You will also have to pay a fee to the Insolvency Service of Ireland - this will be approximately €270.

Essential paperwork includes:

- a Statement of Affairs

- a Statement of Personal Information

- a Petition to be adjudicated a bankrupt - submitted to High Court for approval

Your PIP will help you collate financial data needed to ensure you have a reasonable monthly income in order to look after yourself and your family throughout the bankruptcy.

Step Three - Attend court for ruling on Bankruptcy Petition

When your bankruptcy application is listed you must attend court in order to obtain formal legal approval of your application. You must co-operate fully with the appointed Official Assignee once your petition has been granted and you must attend the Bankruptcy Division of the Insolvency Service of Ireland to be served with a Bankruptcy Order.

You will also be served a Warrant of Seizure permitting the Official Assignee to assume ownership of your property and sell it in order to raise money to pay your creditors. You must hand over all of your title deeds and other relevant documents showing ownership of assets. Jointly-owned property must be dealt with appropriately in advance.

Notification of your bankruptcy will be entered in the Register of Bankruptcies. It can also

either be posted free of charge on the ISI website or in an advert in Iris Oifigiúil, a national daily newspaper. 

Step Four - You are subject to bankruptcy rules for three years

For the duration of the bankruptcy, which is usually for three years, you must comply with all of the terms which govern key issues such as acquisition and disposal of assets, income and employment.

You can maintain a bank account and will be allowed to retain sufficient income for reasonable living expenses but surplus income must go towards repaying your debts. 

It is an offence to obtain credit of €650 or more without disclosing your bankruptcy and there are restrictions on holding certain positions such as company directorships. You must also inform the Officiall Assignee if your financial circumstances change.

Step Five - You are discharged from bankruptcy and your debts written off

Normally people are automatically discharged from bankruptcy after three years but the term can be reduced with creditor agreement or extended if you do not comply with all the terms.

Once your property has been sold and the proceeds paid to creditors, outstanding debts are written off.

However, you may have to continue contributing your surplus income towards reducing your debts for up to a maximum of five years in total.

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Advantages of bankruptcy

  • You will be protected from creditors pursuing you individually for unpaid debt
  • You and your family will be guaranteed a reasonable standard of living
  • You will only have to repay a portion of your overall debts
  • You will be discharged from bankruptcy and your debts written off three years
  • Insolvency Service of Ireland has reduced bankruptcy fees to €270
  • A Personal Insolvency Practitioner can guide you through the entire process

Disadvantages of bankruptcy

  • It is a legal process involving handing over ownership of your property
  • You are not guaranteed to retain your home, though it may be possible
  • You must have total debts of at least €20,000
  • There are restrictions on obtaining credit and certain employment
  • Your details will be entered on a public register
  • It may impact adversely on your credit rating

Contact us on 01 905 3150 for free friendly advice on whether bankruptcy is the right solution for you.

Frequently Asked Questions

This is clearly a prime concern for people, especially those with substantial mortgage arrears. You may not necessarily lose your family home if you are declared bankrupt. Whether or not your home will be sold to pay creditors depends on your individual situation and on key factors such as how much the property is worth, much you owe your lender and the lender’s stance.

You may be able to reach an agreement to remain living in the house while you make repayments.  In any case, the Official Assignee may not sell your home without obtaining permission from the High Court which will make a ruling after considering the interests of creditors as well as of you, your partner and any dependents. It is best to take professional advice on all the implications of entering bankruptcy including what may happen to your home.

That depends on the value of your car and whether it is deemed necessary for work purposes. You are allowed to retain essential assets (including a car) up to a total value of €6,000. If you have a valuable car you may have to replace it with a cheaper model.

The Insolvency Service of Ireland has established guidelines on a Reasonable Living Allowance which act as a safeguard against people being unable to maintain a reasonable standard of living if they enter any approved debt solutions, including bankruptcy Before the bankruptcy is formalised your PIP will work with you on a realistic budget which provides enough money for essential items for you and your family as well as a modest amount for contingencies and savings.

If you own a property jointly with a partner or spouse, only your share of it will be transferred to the Official Assignee. Also, if there is equity in the property, when it comes to selling your share, your spouse will be offered the first opportunity to buy it from the Official Assignee.

It normally lasts for three years after which you will be officially discharged and your debts will be written off. However, it may be extended if you have not kept to the terms of the Bankruptcy Order. Also, you may have to continue to make payments from ‘surplus income’ towards repayment of your debts for up to a maximum of five years (from the date of the Bankruptcy Order).

Your details will be entered on the Register of Bankruptcies maintained by the Office of the Examiner of the High Court.  It remains there but will be updated to show your discharge date at the end of the bankruptcy period. It does not include address details for people discharged from bankruptcy. 

Obtaining credit is likely to be difficult while you are subject to a Bankruptcy Order and you should be aware that it is a criminal offence to obtain credit of €650 or more without disclosing your bankrupt status.

No, your creditors will no longer be permitted to contact you directly - they will have to deal with the Official Assignee instead.

Yes, generally this is not only possible but desirable. However, there are a small number of situations in which a person who is declared bankrupt may not be able to retain their existing job. These include company directors, liquidators, and some professions such as law.

Carrington Dean

Unit 3 Hays House
High Street
Tallaght
Dublin 24

(01) 905 3150

Opening Hours

Mon: 9:00am - 8:00pm
Tues: 9:00am - 5:00pm
Wed: 9:00am - 8:00pm
Thu: 9:00am - 5:00pm
Fri: 9:00am - 5:00pm
Sat: Closed
Sun: Closed

© 2017 Carrington Dean (Ireland). All rights reserved.

Carrington Dean (Ireland) Limited is a Limited Company registered in Ireland, registered number 537533

Registered office - Unit 3 Hays House High Street Tallaght , Dublin 24

Peter Dean of Carrington Dean Ireland is authorised by the Insolvency Service of Ireland to carry on practice as a personal insolvency practitioner. Peter Dean is also authorised to act as an insolvency practitioner by Institute of Chartered Accountants in England and Wales.