Oireachtas committee proposes bankruptcy term be reduced to one year

The Oireachtas Committee on Justice, Defence and Equality has proposed that the term for bankruptcy be reduced to one year from the recently introduced three-year term.

The committee is also proposing that provision be made for the official assignee to apply for an extension up to three years in certain circumstances. The Report on the Term of Bankruptcy in Ireland was published by the committee after it received more than 100 submissions.

The Department of Finance opposed the proposal to reduce the term for bankruptcy to a year when it was suggested in May, on the basis it would make little difference as 70 per cent of mortgage bankruptcies end in repossessions.

If the recommendation is adopted it is expected the law would be changed during the Coalition’s term of office, which would being Irish bankruptcy law into line with those in the UK.

Committee chairman David Stanton TD said the issue of bankruptcy was very relevant in the aftermath of the banking crisis and financial collapse.

“Bankruptcy should not be used as a ‘quick fix’ solution for someone in financial difficulties to the detriment of their creditors when other solutions might be more equitable,” he said.