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Improvements to Bankruptcy.

Over the last 8 years there has been an increase in the number of businesses and families who have been forced to file for bankruptcy. Bankruptcy is a court process which deals with debt payment. If it is successful, the process allows the debts to be written off after a period where assets or surplus income are used to pay back creditors. As it stands, a person may be required to continue paying debts up to 5 years after they are legally declared bankrupt, and it is an issue. Recently, Minister for Justice, Frances Fitzgerald, brought a Bill to cabinet which aims to improve bankruptcy laws and will reduce the duration of bankruptcy from 3 years to 1 year, and the duration of repayment from 5 years to 3 years.

One of the key issues with bankruptcy is it stands today is ‘bankruptcy tourism’. Where people moved from the Republic of Ireland to Northern Ireland or England and Wales to take advantage of their 1 year bankruptcy period. However, only a small percentage can do this, as they need some money in order to do so. The new Bill would level the playing field in this regard and allow those who have serious debts to move on with their lives faster. Also, the new Bill looks to increase the penalties for those who attempt to play the system and hide assets or income from the courts.  

Improvements to bankruptcy law are welcomed but problems remain. Before you are declared bankrupt, you must complete a Personal Insolvency Arrangement (PIA). This deals with secured debts, such as a mortgage. Without this, you cannot be declared bankrupt, unless the debts you have are only unsecured, such as credit cards, personal loans or business loans.

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