Potential bankrupts who avail of the new bankruptcy laws will not automatically lose their family homes if they are declared bankrupt, the official assignee in bankruptcy has said.
Chris Lehane, a court-appointed trustee who takes control of the assets of bankrupts, has moved to reassure people who may want to avail of new bankruptcy laws that in many cases the mortgage of a bankrupt could continue to be paid if it is a reasonable amount.
Mortgage
While the bankrupt's equity in his home will remain in the control of the official assignee after he has been discharged from bankruptcy, it can be bought by a spouse. The family home cannot be sold without court approval. "In a lot of bankruptcy cases, the mortgage continues to be paid while the unsecured debts are wiped out," Mr Lehane said.
Legislation reducing the term from 12 years to three came into force yesterday.
Mr Lehane said there was now much better information available for people who wish to declare themselves bankrupt without using a solicitor. The Insolvency Service of Ireland, of which the official assignee’s office has become a part, has produced a booklet to advise debtors. A further booklet on how to fill out the forms required for bankruptcy will be available on the insolvency service and the Courts Service websites.
“What the booklets will not do is advise if it is appropriate to declare bankruptcy; that’s where people need independent advice,” Mr Lehane said.
He expects a “significant number” of applications from individuals wishing to declare bankruptcy following the change in the law.
Up until now, the number of self-adjudications in Ireland has been very low, only eight from January to November 22nd this year.
However, in the UK, which has a one-year automatic discharge, 85 per cent of bankruptcies are self-adjudicated. In the last two weeks, people had begun to come forward here to make personal applications, Mr Lehane said.
Staff at the official assignee's office has grown from nine to 32 and seven accountants have been recruited to improve accountancy expertise. There are now six case teams in the office so that complex cases can be dealt with more quickly, he said.
Barrier
Cuts to the up-front costs involved in bankruptcy are also expected to be approved. The costs were seen by many as a barrier to declaring bankruptcy.
The Companies (Miscellaneous Provisions) Bill 2013 allows for bankruptcies to be advertised on the website of the insolvency service instead of in newspapers. This will cut upfront costs by up to €1,000.
A fee of €650, unchanged since 1988, will still be required toward the costs of the official assignee’s office, along with stamp duty of €102.
Once adjudicated bankrupt, further costs incurred by the official assignee’s office come out of the bankrupt’s estate.
