Bankruptcy changes expected to begin today

Changes to legislation that will shorten the length of time a person remains in bankruptcy are expected to be introduced today.

Minister for Justice Alan Shatter is expected to commence section 4 of the Personal Insolvency Act 2012 dealing with bankruptcy this afternoon.

The new legislation will mean bankrupts can be automatically discharged from bankruptcy in three years, down from 12 years.

Other elements of the act, including the introduction of alternative insolvency arrangements such as debt relief notices and personal insolvency arrangements, have already been introduced.

Staff
The Insolvency Service of Ireland (ISI) has been readying itself for the beginning of the bankruptcy legislation, with official assignee Chris Lehane, who takes charge of the assets of a bankrupt, moving to the ISI offices near the Phoenix Park.

Staff numbers at the office have also been increased to deal with new cases. And interest groups, including debtor advocates New Beginning, have predicted “an avalanche” of bankruptcy cases.

Section 4 will also increase the level of debt required to make a person bankrupt.

A debtor must owe a creditor €20,000 under the new system before he or she can be forced into bankruptcy or make a petition to declare themselves bankrupt, compared with €1,900 which applies currently.

Other changes to be introduced include an increase in the value of assets exempted from being seized by the official assignee.

Household furniture or tools and equipment required for the bankrupt’s occupation up to the value of €6,000 will be exempt, a doubling of the threshold.