This week Minister for Justice Alan Shatter signed an order to introduce the measure reducing the length of bankruptcy term in Ireland from 12 to 3 years.
Commenting on the introduction of the process Lorcan O’Conor ISI Director said: “Having the bankruptcy process become part of the Insolvency Service makes it easier for debtors as there is now a single point of contact for anyone dealing with over-indebtedness. It enables the ISI to administer all debt solutions from one place, improving efficiencies and streamlining the process.”
It was reported that thousands are expected to apply for bankruptcy in Ireland with the reduced term, but entering bankruptcy is a difficult process and it remains to be seen if the reduced term of 3 years will stop the so-called bankruptcy tourism to the UK in particular. The bankruptcy term in the UK is currently 12 months and we have seen many Irish people basing themselves in the UK to avail of its more lenient bankruptcy regime. During 2014 we will see if those considering this insolvency process will remain in Ireland to do so or continue to opt to move to the UK.
Commenting on this legislation KavanaghFennell believe this is a positive move reducing the bankruptcy term from 12 to 3 years, however, it is still a considerable gap in comparison to the 12 month period offered in the UK. While the new law may allow an indebted person to emerge from bankruptcy after 3 years, living the day to day as a bankrupt for a period of 1 year may continue to be a more inviting option.