What is a Bankruptcy?

Bankruptcy is a legal process that allows individuals who are unable to pay their debts to have those debts discharged, or written off. During the bankruptcy process, the ownership of the person’s property and possessions transfer to the Official Assignee in Bankruptcy to be sold by him for the benefit of those to whom the individual owes debts (creditors). When the person’s property is sold, the Official Assignee will make sure that the proceeds are shared out among creditors and any outstanding debt will be written off.

Bankruptcy normally lasts for 1 year, and during this time, all unsecured debts are written off. However, property and possessions transfer to the Official Assignee (except for essential assets up to a value of €6,000) and any surplus income (income less reasonable living expenses) must be contributed towards debts for up to 3 years by way of a bankruptcy payment order. If seeking credit above €650, a person must disclose that they are bankrupt.

It’s important to note that bankruptcy should only be considered as a last resort, as it can have serious consequences for your credit rating and your ability to obtain credit in the future. If you are struggling with debt, there may be other debt solutions available to you, such as a Debt Settlement Arrangement (DSA) or a Personal Insolvency Arrangement (PIA). A PIP will assess your financial situation to determine the appropriate solution for you.