Part 4 of the Personal Insolvency Act 2012 provides a number of coherent amendments to the 1988 Bankruptcy Act and provides for a much less costly approach to bankruptcy. The amendments follow on from the 2011 Civil Law Act (Miscellaneous Provisions).
The new provisions for the act are as follows:
- A creditor bankruptcy summons
(I) €20,000 is the new minimum amount for a creditor or combined non-partner (€1,900 is the current limit for a creditor and €1,300 is the limit for a combined non-partner creditor).
(II) The debtor must be given fourteen days notice to ensure that a bankruptcy settlement is not brought prematurely by a creditor. This time allows the debtor to consider other options such as Debt Settlement Arrangement or Personal Insolvency Arrangement.
- In order for a creditor to petition for bankruptcy the creditor must prove debt over €20,000.
When a debtor makes a petition they must:
(I) Swear an affidavit declaring that they have made considerable efforts to find alternatives to bankruptcy, such as Debt Settlement Arrangement or Personal Insolvency Arrangement, and,
(II) Present statements which support the claim that their debt exceeds their assets by more than €20,000.
- The adjudication of a creditor’s petition for bankruptcy
The assets and liabilities of the debtor will be weighed and assessed by the court and when applicable legal proceedings may be adjourned to allow the debtor to enter into a Debt Settlement Arrangement or Personal Insolvency Arrangement.
- Excepted articles
The maximum value of household furniture, tools or equipment required by a bankrupt for a trade or occupation has increased from €3,100 to €6,000.
- Avoidance of fraudulent preferences and other transactions made before adjudication in bankruptcy.
The time period is increased from 1 year to 3 years.
- Avoidance of other settlements
The time period with regard to voluntary settlements of property is increased from 2 years to 3 years before adjudication to bankruptcy.
The following new provision will apply for discharge from bankruptcy:
(I) automatic discharge from bankruptcy will apply after 3 years from the date of adjudication.
(II) When the Act has come into law with bankruptcies having existed for 3 or more years they will be automatically discharged after a period of 6 months to allow for any creditor to register an objection.
(III) The unrealised property of the bankrupt will remain vested in the Official Assignee in Bankruptcy after discharge from bankruptcy and the bankrupt party will remain under a duty to co-operate and fulfil Assignee terms and conditions with regard to their property.
(IV) A creditor or an assignee can register an objection with the court on the basis that the debtor has failed to co-operate with the terms and conditions of the agreement or if the debtor is suspected of having concealed assets or income. The court can suspend the discharge while an investigation is underway.
(V) Following court proceedings the court may rule for the bankrupt to make payments of their income or assets to the Official Assignee which will in turn be made to the creditors. In making this decision the court will have considered the bankrupt’s living expenses, income, etc. This payment order can be reviewed if the income or assets of the bankrupt changes. This order must be applied for before the bankrupt has been discharged from bankruptcy and may not operate for more than 5 years.
In the 1988 Bankruptcy Act there are no prohibitions preventing the bankrupt from participating in employment. Such prohibitions, where they exist, are evident in sectoral legislation; such as the Electoral Acts with regard to the membership of Dail Eireann in contracts of employment.
Regulation of PIPs
The regulation of Personal Insolvency Practitioners is evident in part 5 of the act. Despite this a definitive approach to the regulation of PIPs whether they are members of the legal or accountancy professions, still awaits a final decision. The Departments of Finance and Justice and Equality and the Central Bank consult in this regard and will legislate on this decision in the future.