Tuesday, December 03 14:36:57
The government today brought in its new bankruptcy law that will bring hope to householders mired in unsustainable debt and which reduces the duration after which someone can be discharged from bankruptcy from 12 to three years.
The new law is the final part of the Personal Insolvency Act and aims to make bankruptcy less punitive and costly.
The reduced time-frame is seen as an attempt to stop so-called bankruptcy tourism which has seen Irish people moving to the UK to avail of its more lenient bankruptcy regime.
While the new law may allow an indebted person to emerge from bankruptcy in Ireland after three years, debtors may have to continue making payments to creditors for a period of up to five years subject to a court order.
Mr Shatter said the move completed the Government's reform of personal insolvency and bankruptcy law in Ireland.
He said that anyone who has already been in bankruptcy for three years or more would be automatically discharged in six months' time.
The Insolvency Service of Ireland has welcomed the signing of the law, which its director Lorcan O'Connor said would make it easier for debtors who were seeking solutions.
"We now have a full suite of debt solutions available to people who are insolvent that will ensure they can return to solvency in a fair, transparent and equitable way," he said.
The Free Legal Advice Centre has said they expect that thousands of people will apply for bankruptcy.
Senior policy researcher with FLAC Paul Joyce said Mr Shatter has already suggested that about 3,000 people might apply for bankruptcy in the first 12 months.
Speaking on RTE's Morning Ireland, Mr Joyce said today is the last of a series of measures to help assist people resolve their over-indebtedness, with other parts of the Personal Insolvency Act already in place.
Paul Carroll, accountant with Neo Financial Solutions (www. Neofinancialsolutions.com) has been providing advice on debt restructuring, debt consolidation and other options such as personal insolvency or UK bankruptcy to people over the past couple of years.
He said that, like in the financial crises in 2008/09 in America, it has taken a threat of a massive weapon to address the household debt crises here in Ireland. The weapon has finally arrived in the form of the new bankruptcy provisions, which will pass into law today.
This important law will finally enable borrowers, to not only threaten to push the nuclear button but they will actually be able to do so, which is going to bring the lenders very much into focus. This day has been a long time coming; bankers must have woken up this morning and known this, he said.
"Now bankruptcy has become a real option in dealing with debt in Ireland. Speaking as someone who has been through a bankruptcy, I know how final it is in terms of dealing with debts, how much relief it gives from the stress of the debt and also most importantly how it is a way of being able to start over."