Bankruptcy is a process whereby all the assets/property of an individual who is unwilling or unable to pay their debts is transferred to an official of the High Court, the Official Assignee. The Official Assignee will administer the sale of these assets and distribute to creditors whatever funds remain, after first discharging costs, expenses, court fees and priority (preferential) debts.
Bankruptcy proceedings are brought in the High Court. Subject to conditions, a debtor (i.e. person who is in debt) or a creditor or group of creditors can bring an application for bankruptcy. It should be noted that the Personal Insolvency Act 2012 made certain amendments to the Bankruptcy Law which includes reducing the discharge period from 12 years to 3 years. In June 2016 this term was further reduced to a 1 Year Period.
In addition it is a requirement that a debtor, when petitioning for adjudication against himself/herself will now be required to swear an affidavit that he/she has made reasonable efforts to reach an appropriate arrangement with creditors through a DSA or a PIA.
The Personal Insolvency Act does enlarge the list of "Acts of Bankruptcy" contained in the Bankruptcy Act 1988. It should be noted that an individual's failure to adhere to the terms of a DSA or PIA may constitute an "Act of Bankruptcy".
The Bankruptcy procedure will apply to debt (both secured and unsecured) over €20,000. It will be the only option available in respect of secured debt of more than €3 million unless all secured creditors agreed to increase that amount.
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