Bankruptcy is a legal process involving the seizure of property & assets of an individual who is unable – or unwilling – to pay their debts, the assets and property is transferred to a trustee to be sold. The proceeds of the sale are then distributed between the person’s creditors.

Bankruptcy can be applied for by debtors providing that they can prove that they have €2,000 to cover the costs of the bankruptcy process.

Banktruptcy in Ireland is a long drawn out  and difficult process due to Irelands outdated laws which is in real need for updating. In 2008 only 17 bankruptcy peitions were applied for by individuals, of which 8 people were adjudicated bankrupt, according to figures provided by the Court Service.

The debtors family home will also be sold to pay creditors, however, if the house is owned by both debtor and their spouce the trustee must apply to the High Court for permission to sell the house. After permission is granted the house is then sold, the remaing proceeds are then split between both debtor and spouce with the debtors proceeds being disbursed amoungst creditors.

Any individual who is made bankrupt in Ireland remains a bankrupt, unless they have been discharged by the court. The courts will only consider allowing an individual to leave bankruptcy after enough money has been raised through the sale of their assets to cover the costs, fees, expenses and certain priority debts that have arisen in the bankruptcy process after a 12-year elapsed period.

However, bankruptcy has major pitfalls including:  An individual declared bankrupt cannot be a director in a company without the permission of the court, and they cannot hold certain positions as an elected representative..

Any existing or fufure inheritance that the individual recieves will be used to pay creditors. The court can order part of the bankrupt’s salary or pension to be deducted to pay creditors. The individual will find it extremely hard to recieve any credit in the future as their credit rating will be severely affected.

Once a person becomes bankrupt, their name and address is entered into the Bankruptcy Register kept by the Examiner’s Office, which is widely used by individuals looking to sell or buy property. Even if the person is discharged from bankruptcy, their name will remain on the register.

Contact The Debt Advice Team

For more information about bankruptcy in Ireland and the bankruptcy process please contact The Debt Advice Team on 01657 5602 and chat informally with one of our Senior Advisors who will be happy to help.

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