Changes to Bankruptcy Laws Welcomed

“I warmly welcome the Civil Law (Miscellaneous Provisions) Bill 2011. I particularly welcome the provisions contained in the Bill regarding new bankruptcy legislation,” said Kildare North TD, Anthony Lawlor.

Among several other provisions, the Bill will decrease the bankruptcy discharge period from twelve years to five years, in order to reduce the economic burden put upon those who find themselves declaring bankruptcy. Comparisons from Northern Ireland, the U.K., and the United States show that Ireland’s current bankruptcy policies are inadequate and inefficient.

In the U.K., discharge from bankruptcy generally happens within twelve months of first declaring bankruptcy. Under Chapter 7 of United States bankruptcy legislation, a person cannot declare bankruptcy for a second time for a minimum of six years. This timeframe serves as a safeguard against multiple filings by the same individual.

“I believe that if the bankruptcy discharge period in Ireland was reduced to twelve months, 18 months, or even two years, a stipulation could be included so that people could not declare bankruptcy again for a set period” said Anthony Lawlor.

Up to September 2010, 19 people in the country declared bankruptcy, up from 17 the previous year. In contrast, in excess of 1,200 people in Northern Ireland declared bankruptcy in the same period of time. This disparity supports the idea that in Ireland it is not economic for individuals to declare bankruptcy, and reports from the Money Advice and Budgeting Service (MABS) indicate that the organisation is advising people not to do so until they have considered all possible options. MABS also stated that current bankruptcy procedures are generally regarded as inappropriate for dealing with consumer debt.

“Although I would personally prefer if the bankruptcy discharge period of time was less than the proposed five years, these new provisions are a step in the right direction. In particular they are an important measure to bring us into line with our neighbours on this island and these provisions will be a way for people to solve their debt problems in a more efficient, economical way, “concluded Anthony Lawlor, TD