As reported by the Irish Times, the legislation to reform the personal insolvency regime will soon be published. Readers are invited to comment on the appropriate period of bankruptcy and the appropriate treatment of mortgage obligations.
As reported by the Irish Times, the legislation to reform the personal insolvency regime will soon be published. Readers are invited to comment on the appropriate period of bankruptcy and the appropriate treatment of mortgage obligations.
10 replies on “Bankruptcy Law Reform”
No need for it possibly? All the big fish have been given ample time to do the necessary overseas. Gates and runaway horses come to mind.
Since Sean Quinn is now likely to be made bankrupt in the Republic, I expect sweeping changes to the legislation within the next six months or so, to allow for shorter bankruptcy terms.
The Independent today carries a more detailed piece than the IT.
Doesn’t look like mortgage holders will get much respite. The stack is fully bank-loaded. The gentry are steadily regaining control.
Another state agency to be created?
& an additional process to choose from besides the bankruptcy process? Why two processes instead of just having one?
In answer to the question(s):
a) 12 months – same as the UK
b) write all mortgage debt off for everyone now, regardless of bankruptcy reform, so that it doesn’t need to be considered….. er, and so that I can be free of these chains and have more disposable income (please)
Can anyone seriously defend reducing the term of bankrupcy in a country that has never punished white-collar crime?
Do the great majority of law-abiding honest hard-working people not deserve some protection of the state from the activities of anti-social sociopaths? The 12-year ban at least put a stop to the gallop of the most outrageous offenders, eventually.
Haven’t “the risk-takers” (remember them fellas that were always mentioned before, but no longer, whenever the wealth creators were lionised?) done enough damage ?
@Jesper
In Ireland it is absolutely necessary that there are two processes one for the well connected that can be manipulated by the politicians and the other that follows the rule of law for the hoi polloi.
Yep , Mickey Hickey sums up the total lack of consistency in the debate so far.
Millionaires go bust because they borrowed too much money = Criminal = PUNISH GET EVERY LAST CENT OUT OF THEM TIL THEY DIE
“Hard-pressed homeowner who borrowed too much = victim = DROP THE DEBT
Make your minds up.
Either we forgive debt to allow people to move on or we don’t.
Scale is an issue only in terms of the professional help the rich had in hiding assets.
A year seems pretty short, unless there is a mechanism ( and I think there is in the UK) that undeclared assets can be seized after the discharge period…
@Mickey Hickey,
“In Ireland it is absolutely necessary that there are two processes one for the well connected that can be manipulated by the politicians and the other that follows the rule of law for the hoi polloi.”
does have a certain logic to it & I believe that your explanation might be the correct one. It would be nice if someone would ask for the official explanation.
1. Period of Bankruptcy
We are in competition with the UK. Therefore our period of bankruptcy/IVA should be no longer then their period. Why would I do risky business here if I risk being out of action for 6 years – effectively a career death sentence for anybody wants ot be self employed and might create jobs.
2. Treatment of Mortgages
Should be the same as now in full bankruptcy – have security and nothing else if go into bankruptcy.
In relation to IVAs, a mechanism needs to be put in place which allows the bank to voluntarily restructure the mortgage as part of the arrangement with all creditors thereby allowing a debtor to maintain his house.
The bank should have the option of (a) realising their security and having the balance due included as an unsecured debt (as is normal in bankruptcy) or (b) restructuring the mortgage, taking a loss like other creditors but maintaining a restructured mortgage debt which survives the process.
The problem is to balance the private property rights of the unsecured creditors and the bank. The private debtors and the bank should come out no worse off and no better off than if they bank enforced its security and became an unsecured creditor for the balance outstanding on the loan. If this cannot be done to the Attorney General’s satisfcation then easiest thing is to provide for the scheme to favour the private creditors slightly and be subject to the banks agreeing to the scheme voluntarily in each case to cure any legal doubt.
Otherwise, the banks should be forced to realise their security upon commencement of the IVA and to take their place in the queue as an unsecured creditor for the balance. Of course, this will leave renegotiation of the mortgage open subject to dealing witht he other creditors.
If a mechanism is to be inserted in the IVA then it might be as follows-
Subject to agreement with the insolvent person on a restructured mortgage (I.P.):
(A) the capital amount of the restructured mortgage be capped at market value of the underlying security, and the bank debt to be included in the balance sheet for the purposes of the IVA period calculated as the negative equity on the mortgage debt including accruals of ALL repayments for the IVA period (to capture cost of not foreclosing on mortgage for period of IVA). This is somewhat unfair on the banks as the banks losses would continue to accrue during the period of the IVA rather than being crystallised like other creditos. However the IVA process probably allows for reasonable rental expenses which might be applied to the mortgage for this period.
OR
(B) It may be that the bank should be entitled to a maximum of interest only payments on the restructured mortgage during the period of the IVA
AND
B(i) the bank debt to be included in the balance sheet for the purposes of the IVA period (i.e. to be subject to a haircut like all creditors) should be calculated as the discount agreed on the original mortgage as part of the original restructuring,
[a bit unfair on other creditors because bank keeps portion of old debt and ony gets a haircut of a haircut]
OR
B(ii) the bank debt to be included in the balance sheet for the purposes of the IVA period should be the should be calculated as the interest on the original mortgage together with the capital repayments which would have been due on that portion of the mortgage which has been written off.