Number of bankruptcies up by quarter in 2013

Forty-four people have been adjudicated bankrupt in Ireland so far this year, new figures show, up 25 per cent on 2012, with the majority being forced into bankruptcy by creditors.

Some 85 per cent of the people who were declared bankrupt had a combination of consumer and business debts, the data shows, while 60 per cent had mortgage debts greater than €600,000.

Of the 44 bankruptcies, eight were triggered by people making personal applications to be adjudicated bankrupt. The remaining 36 were declared bankrupt after creditors took applications against them.

Covering the period from January 1st to November 22nd, the figures were supplied by the office of official assignee Chris Lehane, a court-appointed official who deals with bankruptcies in Ireland.

A debtor is made bankrupt at the High Court either at the request of a creditor or at his or her own request. Fewer than half of the petitions for bankruptcies filed in the High Court over the last few years have resulted in people actually being made bankrupt.

Most petitions
So far this year, Friends First Finance Ltd has made the largest number of people bankrupt, with 11 successful petitions – a quarter of the total number. The company, which gave car and machinery loans, closed to new business in 2009, but continues to operate the loans on its books.

Danske Bank and Bank of Ireland had two bankruptcies each, while Stepstone Mortgage Funding Ltd and Dunbar Assets, formerly Zurich Bank, had one each. The Revenue Commissioners made two people bankrupt for tax debts and nine individual companies had bankruptcies completed.

People who declared themselves bankrupt appeared to be in deeper debt than those who were forced into bankruptcy.

Of the 36 people who had bankruptcy petitions taken against them, a quarter owed less than €50,000 to the person who took the case against them. One-third owed between €50,000 and €200,000.

Of the eight people who declared themselves bankrupt, six had liabilities in excess of their assets of more than €600,000. The remaining two had liabilities of more than €200,000 in excess of their assets. Seven of the self-adjudicated bankrupts were in employment. Their occupations were listed as business people, trade and professionals.

Three-quarters of those who were forced into bankruptcy had been in business and their business debts led to their bankruptcy. The debts of the remaining nine resulted from property investment.

Bankruptcies have been traditionally low in Ireland. Because of the draconian nature of the regime, it was possible for some people to remain in bankruptcy for life.

In 2012, there were 35 people adjudicated bankrupt over the entire 12-month period. The figure for 2011 was 33, with 29 adjudicated in 2010, 17 in 2009 and eight in 2008.

Although numbers declared bankrupt have increased in recent years, they have remained low in comparison with other countries. Last year, 32,000 people were declared bankrupt in England and Wales, where the bankruptcy term is 12 months.

Incoming regime
A new bankruptcy regime is due to come into effect within the next week once part four of the Insolvency Act 2012 is commenced. Under the new legislation, the automatic discharge from bankruptcy will come down from 12 years to three.

A creditor or combined creditors must be owed a minimum of €20,000 before they can apply to make someone a bankrupt , up from €1,900.

Organisations involved in debt resolution have predicted the number of bankruptcies made by individuals on their own behalf will increase dramatically under the new rules.