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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Insolvency unaffordable? That’s not true because here’s how it works

It’s really unfortunate that there are commentators who perpetuate the myth that ‘insolvency is unaffordable’. This is probably best viewed as an example of financial illiteracy showing through what should otherwise be reasoned deduction. Here is a video showing how creditors pay for insolvency, it goes through a simple ‘T account’ breakdown of where the cost lies.

The easiest way to think about it is like this, imagine you go to a bar with another person and they give you money to pay for drinks. The person who actually pays for the drinks is you, you give the money to the bartender, but the cost is born by the person who gives you the money to do it with.

Using that analogy the borrower is the one paying, but the cost is born by the creditors, check out the video, it will help to make that clear.

And remember that when you hear how a person ‘can’t afford to go insolvent’ that they are making the mistake of repeating something they heard without investigation, normally what they really mean to …

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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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