European Debt Crisis

The problems with debt are not limited to people who may face bankruptcy, it also applies to nations. In this video by Bloomberg it takes a look at some of the historical backgrounds to this and explains how the past lead to the financial present.

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The bankruptcy process: Irish Times look under the hood

The Irish Times did the second installation of a person going through bankruptcy today.

Of note is how quick and effective it is on the day, the process is not surrounded with doom or darkness in terms of how the judge deals with people, it is humane, and brief, something to be commended as so much of the road to court 6 is paved with fear and harsh treatment.

We think Conor Pope did a good job of looking into a bankruptcy from start to finish, and wish to thank him for it.

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Irish Times cover the story of a person going for bankruptcy and mention

The Irish Times did a story on a person looking to go for bankruptcy and mentioned us in the article.

Conor Pope did a great job of outlining the issues in general and in particular to Rory, but this line sums it “He owes €60,000 to half a dozen lenders including banks, credit unions and credit card companies – an absolute pittance in the scheme of things – but a debt of sufficient size to give him countless sleepless nights“.

While we can’t assure people don’t lose any more sleep, we can help them find a route to finality of the problem and that, rather than superfluous statements about social rights and wrongs is really what this all boils down to.

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Bankruptcy fees increase

It is really unfortunate that upon bringing out new rules on bankruptcy that the cost of doing it went up! The costs will now be €650 for the official assignee (stays the same)  stamp duty of €190 (almost doubles),  €20 affadavit fee, then €50 to athe petition in ‘Iris Oifigiuil’.

The rump of the increase is in the stamp duty at the examiners office, this used to be €80 now it’s more than double that amount. The problem with this is that many people going bankrupt are on welfare and there is no simple path in some cases towards people on the dole being able to raise this money.

We have yet to see a case where it was impossible, often it means borrowing from relatives or getting friends to help out, selling a car or some other asset, but raising the costs just makes it that little bit tougher on people and means there is less money to pay for professional advice, something many of them would do well to obtain.

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Some solutions don’t work

While there is provision within the insolvency code to allow a personal insolvency application with more than €3,000,000 of debt to be considered, it is not highly likely that we will see much of this. The reason being that insolvency solutions are often predicated on some level of reasonable recovery.

This is the same as examinership for companies, so the individual must be a ‘going concern’, where they aren’t then bankruptcy becomes the more viable option which is perhaps also more appropriate.

So the message is simple, don’t try to use solutions that don’t or won’t work. Insolvency is often critiqued for any manner of reasons, but that is in part because it isn’t the actual appropriate solution.

Equally, bankruptcy may not be, we had a client this week who would be better off working with the bank then opting to go to the UK for an IVA style solution, the only thing we know for sure is that there are no forgone conclusions in dealing with debt and each case is unique.

So be weary of getting into what …

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When you go bankrupt you have to stick to the deal, here is why…

We have mentioned before how bankruptcy has some serious downsides, in a recent blog post we covered one case in particular which was back in the press again.

The alleged non-compliance issue regarding Paul Codd resulted in an arrest warrant which could have lead to a risk of further prison time but he now says he was coerced into giving his undertaking to avoid this because it could have resulted in him being there over Christmas.

His bankruptcy came about due to failure to satisfy a judgement in 2011 for more than a half a million euro. Mr. codd alleges that the police came and knocked down his door with a battering ram and it left his children traumatised.

His total estimated debts are thought to be close to €5m. What this story does is bring into focus some of the downsides of bankruptcy, in particular that of non-compliance, you simply can’t get around the decisions made by the Official Assignee.

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Is ‘free’ better or does it just cost less?

Normally when somebody is good at something they don’t do it for free, that isn’t to say they never offer their talents for free at times, or at their own discretion, but not all the time.

There are plenty of ‘free solutions’ for people in many areas, we have free hospitals and yet half the population pay for health insurance. There is free debt help through long running organisations like MABS and yet people still opt to come to private operators to get the solutions they need.

And that is why we made a decision from the outset to focus on a low cost rather than an unsustainable ‘free’ model. We value our time and the years we spent becoming experts and in turn we sell those talents at the lowest price we can in order to help the maximum number of clients possible.

On that basis we have a large team, people with huge levels of experience, and a commitment to respond to you quicker than other people will so that this is as easy a process as it …

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What happens when you don’t comply?

An important aspect of bankruptcy is how the person deals with the Official Assignees requirements – your compliance makes a big difference. While a person can decide not to play ball, there are consequences to this.

One such example is Paul Codd the former Wexford hurler who spent a weekend in jail for failure to comply with orders surrounding his bankruptcy. His case focused on the failure to comply with an order to return leased machinery and he only avoided more prison time by promising to comply.

So when you are getting your advice (and we always advise going to professionals with relevant qualifications even if it isn’t us) remember that you are not getting a ‘get out of jail free’ card, in fact, messing about with your bankruptcy process will get you jail time in some circumstances as this case showed.

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New bankruptcy regime expected within days

We have been informed that the new bankruptcy changes are due to come into force in a matter of days. This will mean that the discharge period will be reduced to 3 years automatically (in line with European norms).

Another change that will come about is that people will be able to advertise intention to petition for bankruptcy on the Insolvency Service of Ireland website. up to now a national paper advertisement was required, but that is set to change and instead a person will be able to submit their name to the ISI website meaning a figure of several hundred euro can be saved in the process.

All things considered, the changes will bring about both a reduced cost to going bankrupt as well as the introduction of the reduced automatic discharge time. What this means for people in debt who are considering bankruptcy is that the older version (this ‘change’ has been flagged for some time and many commentators are of the mistaken opinion the current discharge time is 3yrs) is eradicated and the discharge will occur in …

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