Bankrupt numbers set to soar under law

‘Potentially thousands’ to seek status annually now that law changed

Director of the Insolvency Service of Ireland, Lorcan O’Connor: “There are ways out [of indebtnedness] now and a second chance for people.” Photograph: Eric Luke

The head of the newly established Insolvency Service of Ireland (ISI) expects thousands of people each year to seek bankruptcy to resolve their debt problems.

Speaking to The Irish Times, Lorcan O'Connor, director of the ISI, said "potentially thousands on an annual basis" were likely to go the bankruptcy route now that the laws had been amended so the period of discharge is down to three years from 12 previously.

Last year just 35 people were declared bankrupt in Ireland. Many have sought bankruptcy in the UK since the crash in 2008 as the period of discharge there can be as low as one year.

The ISI will begin accepting applications for the various insolvency arrangements from September 9th, and it has received more than 4,500 queries to date.


Those with unsecured debts up to €20,000 can seek a debt-relief notice through an approved intermediary such as the Money Advice and Budgeting Service. This is a process that could take three years to resolve.

Those with unsecured debts above this sum can seek a debt-settlement arrangement, which will take up to six years to complete. This will involve dealing with a personal insolvency practitioner (Pip) who will deal seek to finalise an arrangement with their creditors.

'Second chance'

Those with secured and unsecured debts up to €3 million can seek a personal insolvency arrangement (PIA). Again, this will involve a Pip and could take six or seven years to complete.

Those with debts above €3 million are likely to go the bankruptcy route.

Under these arrangements, 65 per cent of creditors must vote in favour of the scheme proposed by the Pip, including 50 per cent of both secured and unsecured lenders.

“There are ways out [of indebtnedness] now and a second chance for people. That’s what this is about,” Mr O’Connor said.

He said more than 20 Pips have been authorised and he expects this figure to exceed 100 in the coming months.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times