On 29 January 2016, the Irish bankruptcy term was reduced from 3 years to 1 year. This Briefing sets out further detail, and summarises recent developments in the area of bankruptcy and personal insolvency.
As signalled in our August 2015 Briefing (New Court review process available for rejected personal insolvency proposals), the Oireachtas Joint Committee on Justice, Defence and Equality recommended to the Minister for Justice and Equality that the bankruptcy term be reduced from 3 years to 1 year (it had already been reduced from 12 years to 3 years under the Personal Insolvency Act 2012).
To achieve this, the Bankruptcy (Amendment) Act 2015 was signed into law on 25 December 2015. Most of the provisions of the new Act (including the reduction in the bankruptcy term) were commenced by SI 34/2016 (Bankruptcy (Amendment) Act 2015 (Commencement) Order 2016) with effect from 29 January 2016.
The key changes introduced by the new Act are as follows:
Bankruptcy term: The standard bankruptcy term is now 1 year rather than 3 years.
Bankruptcy Payment Order: The standard duration of a Bankruptcy Payment Order (a Court order requiring a bankrupt to make payments for the benefit of his creditors from any surplus income or assets (after deduction of reasonable living expenses)) is now 3 years rather than 5 years.
Bankrupt’s home: A bankrupt’s ownership in his home will (in general) transfer back to him after 3 years unless:
- the Official Assignee applies to Court for an order for sale; or
- the Official Assignee and the bankrupt agree otherwise; or
- the Court orders that the home should not re-vest in the bankrupt or orders that the 3 year period be extended.
Other notable changes are as follows…