Bankruptcy Delays Beginning To Build Up

21st May 2014

In just three weeks almost 200 motions for bankruptcy of individuals have come before the High Court. It would appear that the new personal insolvency system, allied with a relaxation of bankruptcy procedures and consequences, has led to a surge in those taking action to tackle big debt problems.

Due to the increased number of bankruptcy applications a number of applicants have been informed of delays within the court process. Some people’s statutory hearings will not take place before July for example.

Early signs of delays building up have led to calls from debt professionals for court resources to be bolstered. Volumes are expected to continue increasing throughout the coming months.

Some people that wish to become bankrupt voluntarily will already be subject to a degree of delay due to the financial consideration involved in the process. Even where an individual chooses to represent themselves in court, they’ll still need to save up €950 to cover the associated official charges. Where finances are already stretched this could take a long period of time.

Another potential cost is that of obtaining a letter from a PIP which confirms that the bankruptcy applicant qualifies for this option. Personal insolvency practitioners will need to spend time reviewing an individual’s circumstances and documentation to make this assessment. The charges for this type of support could be as much as €500, though costs will vary between practitioners.

An advantage of meeting with a PIP before becoming bankrupt is that they’ll be able to review other options that might also be available to you. They can also set-up debt settlement arrangements or personal insolvency arrangements if you meet the applicable criteria and your creditors are prepared to support your proposals.

Plenty of people are uncomfortable entering the legal environment without legal support. Bankruptcy “packages” are increasingly available which incorporate legal representation in court. This additional cost could also cause delays for those that need to save the money up.

Clearly it’s very important that additional resources are deployed to ensure that those who are choosing to become bankrupt aren’t delayed unduly. A cultural change is unfolding whereby increasing numbers of people are prepared to do whatever it takes to leave their debts behind them. Until the personal insolvency processes (applicable to debt settlement arrangements and personal insolvency arrangements) are streamlined, the number of bankruptcies is likely to grow at a rapidly increasing rate.