Declaring bankruptcy gives ‘new lease of life’
‘Bankruptcy has given me a new lease of life’ may seem a curious statement to some yet it is a truism for an increasing number of people in Ireland.
Just the other day one of our clients rejoiced that her whole family had been given a “new lease of life” after finally declaring bankruptcy.
The Debt Background
Mary and her family had been labouring under mounting and unsustainable debt for more than a few years.
Since 2009 she has feared losing her home and perceived the whole personal bankruptcy process as embarrassing for her and her young family. As a consequence she endured the stress of coping with insolvency despite easily meeting the criteria for bankruptcy.
The Changing View Of Bankruptcy in Ireland
Like Mary, the vast majority of people in Irish society still hold tight to the traditional view of bankruptcy as a dirty word. Until a couple of months ago even the laws of the land reflected the negative social stigma attached to bankruptcy.
Thankfully the law has now changed and slowly more and more people are relinquishing their traditional views. Increasing numbers of people in financial distress see bankruptcy as a realistic option to relieve the burden of unsustainable debt. In fact enquiries to our offices have doubled since the new law was enacted – reflecting the impact of the change.
The new bankruptcy legislation in Ireland has brought the law in the Republic into line with that of the North and UK by reducing the normal maximum period for bankruptcy from three years to one.
The move also cuts the duration of bankruptcy payments to creditors from five years to three. The law change further allows for the automatic return of a bankrupt person's assets - including their family home - three years after bankruptcy adjudication if no steps have previously been taken to sell it.
These three key changes mean that people like Mary - who have co-operated and made every effort to avoid bankruptcy - can now look forward to a fresh start within just one year while safeguarding their family home. The changes are like manna from heaven for many who have suffered in silence since Ireland’s economy disintegrated 2007.
Of course there are obvious provisions in the legislation to ensure the system is not abused. Most notably, those who do not co-operate fully with due process run the risk of having the one year bankruptcy period increased up to 15 years at the discretion of the courts.
For the most part though, those entering bankruptcy today can see a shining light at the end of the tunnel. The consequences of the new laws go even further because they have strengthened the hands of people entering into debt negotiations with banks. Previously unreasonable banks may well - all of a sudden - now become much more reasonable in their negotiations and that’s very good news for the honest folk who have endured the misery of insolvency.
Deals with banks will now be easier to strike while bankruptcy will be a much more attractive option than it was previously. All in all there is an infinitely greater opportunity for a new lease of life for those suffering under the burden of unsustainable debt.
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