SEÁN QUINN’S travails in the Belfast courts have thrown the issue of bankruptcy into the public domain.

The core difference between the UK and Irish system is that while in England, Wales and Northern Ireland (Scotland has a separate system) a person can emerge from bankruptcy in one year, in Ireland it takes 12 years – one of the most punitive systems in the EU.

Moves to change the Irish system were made last autumn when a new law was introduced allowing people to exit bankruptcy automatically after 12 years – previously it had been only a minimum period, and in practice could last much longer.

The legislation also allowed for the discharge term to be reduced from 12 to five years, but only if all the costs associated with the bankruptcy and preferred creditors are met – in reality a major barrier for most people.

Under EU law, anyone can petition for bankruptcy in any EU member state in principle.

Crucially, however, they must show that they have their centre of main interest – “comi” as its known in legal-speak – in that jurisdiction. While there is no specific definition of comi, in reality it refers to economic interests. Establishing oneself in the new jurisdiction for six months in advance of the petition is usually deemed sufficient.

This was the crux of the Quinn issue. Unlike Ray Grehan last week, who successfully filed for bankruptcy in London, Mr Quinn failed to convince the court his centre of main interest was in Northern Ireland.

The attraction of petitioning for bankruptcy abroad is obviously proving a pull for some Irish people struggling under the weight of their debts.

According to Steve Thatcher of Irish Bankruptcy UK, which helps Irish people file for bankruptcy across the channel, around £200 million of Irish debt has been written off last year in the English courts, mostly relating to a handful of Irish people.

Once bankruptcy is granted, an officer receiver is appointed by the Insolvency Service in the UK to handle the debts and assets and to liaise with creditors. The ruling is binding in the home country.

While the bankruptcy regime is freely used in the UK – there are tens of thousands of bankruptcies in the UK every year compared to around 300 here, most of which are instigated by creditors – Irish people have proved relatively reluctant to seek bankruptcy abroad.

The reality of losing a home, moving (albeit temporarily) to another country, and the implication of bankruptcy on credit rating and the future ability to secure a loan, are still deterrents. Solicitor Anthony Joyce, who acts for property owners in distress, says however there has been a big increase in the number of people looking at bankruptcy options abroad.

The consensus appears to be that most people are waiting to see what the new personal insolvency laws will bring before deciding whether to file for bankruptcy.