Despite being updated in 1988, the Bankruptcy Process in Ireland remains an archaic relying heavily on the thought process of the Bankruptcy Acts dating from colonial times, InsolvencyJournal.ie reported in a commentary.
With no automatic discharge and high barriers to overcome before discharge can be sought, the punitive nature of our bankruptcy laws meant that a man convicted of murder could complete his sentence and be released into society before a man made bankrupt on the same day could be allowed to obtain credit or leave the state without permission.
As a result, Irish Bankruptcy laws are ineffective, costly, punitive, rarely used and a rethinking of debt forgiveness procedures remains badly needed.
The Key Players’ Proposals
In the run up to Election 2011, InsolvencyJournal.ie made contact with the main political parties to determine their respective policies on corporate and personal insolvency. Only Fine Gael responded prior to the election however given media black out requirements, it was not possible to report on same in advance of the election. The proposals received are in general format and specifics will be needed and certain key areas will need to be clarified now that Fine Gael are in a position to form a government albeit in coalition with the Labour party.
In light of the very extensive research and consultancy process entered into by the Law Reform Commission prior to launching the Report on Personal Debt Management and Debt Enforcement on 16th December 2010, it is logical that Fine Gael’s general proposals, briefly outlined below, do not divert overly from the proposals put forward by the Law Commission:
1) A flexible bankruptcy system
2) Out of court debt settlement
3) Individual Voluntary Debt Plans
4) Commercial Voluntary Debt Plans
The difficulty
The key difficulty for this new Government in drafting legislation on insolvency is to strike a balance between fairness to the debtor and fairness to their creditors. Too lenient a process will see a lack of responsibility, increasing bad debts, the restriction of credit terms, an overburdened system, a lack of international credibility and a slow painful grind to a halt of economic activity. Too punitive a system and you basically have a reoccurrence of our present Bankruptcy Act, 1988. Read more.
