A DEBT RESTRUCTURING expert is predicting that there will be at least twice the forecast number of 3,000 people filing for bankruptcy in 2014, and claims the option is less costly and more straightforward than insolvency.
Justice Minister Alan Shatter has given a “tentative” estimate that 3,000 people will avail of bankruptcy this year, following the commencement of new laws that came into effect last month. The new procedures reduce the term for the process from 12 years to three.
The reduction in the term is seen as a way of reducing “bankruptcy tourism” which has seen individuals travelling to the UK to declare, as the term there is usually one year. Meanwhile, the new Insolvency Service of Ireland has been up and running since September.
Financial expert and author of the ‘Irish Bankruptcy Guide’ Paul Carroll said that there would be fewer insolvency cases than expected, but predicted the figure for bankruptcies could top 6,000.
“The new bankruptcy system in place now allows people to get rid of their debts immediately, is less costly and will be a real debt solution for the majority of people,” Carroll said.
“Of our current active clients, only 5 per cent will go forward for insolvency. We expect about 80 per cent to go through bankruptcy and the remaining 15 per cent will be voluntary arrangements.
Carroll said the changes to the process had made bankruptcy “a much simpler and quicker process” that was more appealing than insolvency, which he claimed lasted for longer and could have more conditions attached.
A person can be regarded as insolvent then they can’t pay their debts or have more liabilities than assets. A court determines that a person is bankrupt, and legal orders are put in place to resolve their situation. Bankruptcy is generally seen as a last option and highly affects a person’s credit rating.
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