The Oireachtas justice committee has recommended that the bankruptcy term should be cut from three years to one year. The move puts pressure on the Coalition to act on the issue as its previous move to reduce it to three years from 12 years was widely criticised as not going far enough. The justice committee also left open the option for some bankruptcies to be extended to three years.
A review of the current bankruptcy legislation
Committee chairman David Stanton warned against bankruptcy being used as a temporary solution to money problems, he mentioned: “Bankruptcy should not be used as a ‘quick-fix’ solution for someone in financial difficulties to the detriment of their creditors when other solutions might be more equitable. “However, based on this process, the committee believes this issue should be kept under constant review and believes the mechanism of bankruptcy should aid recovery in the fairest possible way, but not excessively punish the debtor.”
The TD said the financial collapse had thrown Ireland’s bankruptcy laws into sharp focus: “The issue of bankruptcy is a matter that retains renewed and very relevant context in the aftermath of the banking crisis and consequent financial collapse. “The committee opened a consultation process on one very specific matter, namely, should the term for bankruptcy in Ireland be reduced from three years to one year.”
The bankruptcy issue has caused tension in the Coalition after the insolvency regime put in place in 2013 was widely criticised for not being effective enough and should have been brought into line with the 1 year term in Northern Ireland and the UK.
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