Frequently asked questions in Bankruptcy ISI

Frequently asked questions in Bankruptcy Page 1

Frequently asked

questions in

Bankruptcy

ISI

Tackling problem debt, together

                                           Frequently asked questions in Bankruptcy     Page 2 
Table of Contents  
General ................................................................................................................ 5 
1  What is bankruptcy?.............................................................................................................. 5 
2  How much does it cost to go bankrupt? ............................................................................... 5 
3  Am I eligible to seek bankruptcy? ......................................................................................... 5 
4  What steps do I need to follow to declare myself bankrupt? ............................................... 6 
5  What happens in court on the day of adjudication? ............................................................ 6 
6  How long does my bankruptcy period last? .......................................................................... 7 
7  What could prevent me from being discharged from bankruptcy? ..................................... 7 
8  What are the immediate effects of bankruptcy? .................................................................. 7 
Debts and Assets .................................................................................................. 8 
1  Why is the bank still ringing and writing to me about my mortgage? .................................. 8 
2  What happens to my bank/credit union accounts? .............................................................. 8 
3  What will happen to my assets after I have been adjudicated bankrupt? ........................... 8 
4  What will happen to the assets in my bankruptcy estate after I have been discharged? .... 9 
5  Will my name be removed from the Bankruptcy Register at any time? .............................. 9 
6  What types of debt can be included in bankruptcy? ............................................................ 9 
7  What types of debt cannot be included in bankruptcy? ....................................................... 9 
What do I have to do to aid the Bankruptcy process? ........................................ 10 
1  What are my duties and obligations in connection with bankruptcy? ............................... 10 
2  Do I have to complete every section of the Statement of Affairs/ Statement of Personal 
Information forms? ......................................................................................................................... 10 
3  Who manages my estate? ................................................................................................... 10 
How does bankruptcy affect my day to day life? ................................................ 11 
1  Are any assets exempt from my bankruptcy? ..................................................................... 11 
2  Can I obtain credit from someone while I am bankrupt? ................................................... 12 

                                           Frequently asked questions in Bankruptcy     Page 3 
3  Can I operate a bank account while I am bankrupt? .......................................................... 12 
4  Can I travel outside the jurisdiction while I am bankrupt? ................................... 12 
5  Will details of my bankruptcy be published anywhere? ..................................................... 13 
6  Will bankruptcy affect my employment? ............................................................................ 13 
Income Payment Assessments and Orders ........................................................ 13 
1  How is my income payment contribution assessed? .......................................................... 13 
2  What  is  the  difference between  a  Bankruptcy  Payment  Order  and  an  Income  Payment 
Agreement? .................................................................................................................................... 14 
3  What happens if my financial circumstances change during my bankruptcy? ................... 14 
4  How long will I have to make payments for? ...................................................................... 15 
5  I have a Bankruptcy Payment Order but my circumstances have changed, what do I do? 15 
6  Why weren't all my expenses included in my income assessment? .................................. 15 
7  What is considered reasonable for housing costs?............................................................. 15 
Self Employed, Business Partnerships and Pensions .......................................... 15 
1  Can I still trade while I am bankrupt? ................................................................................. 15 
2  I am self employed, what are my obligations to the Revenue Commissioners? ................ 16 
3  How will bankruptcy affect business partnerships? ........................................................... 16 
4  What happens to my pension? ........................................................................................... 16 
Property related issues within Bankruptcy ......................................................... 17 
1  How will property owned jointly with a bankrupt person be affected? ............................. 17 
2  What will happen to my family home? ............................................................................... 17 
3  I have received a letter saying that my family home is transferring back to me.  I am happy 
to have it back as I am still living there with my spouse/partner but I do not know what will happen 
about the mortgage as I have not paid it for quite some time. ..................................................... 18 
4  I do not want my family home back. What should I do? .................................................... 19 
5  I am separated from my spouse/partner who was bankrupt. However, I am not a bankrupt.  
My spouse/partner is named on the mortgage. I have just been told that the half share of my 

                                           Frequently asked questions in Bankruptcy     Page 4 
family home is going back to him/her.  My spouse/partner left me and doesn’t live in the home. I 
am in the family home paying the mortgage, with no support from my spouse/partner and I do 
not want him/her getting back his/her half share. ........................................................................ 19 
7.6  My spouse/partner who I am separated from has rang me to tell me that he/she has 
informed you that he/she does not want the family home back.  I am still living in the family 
home and I am paying the mortgage, what happens to my home now? ................................. 20 
7.7  I have a tenant in a residential investment property that I owned pre-bankruptcy. What do 
I have to do? ................................................................................................................................... 21 
7.8  How will property that I own abroad be affected? ............................................................. 21 
7.9  How does bankruptcy affect property transferred by the bankrupt person? .................... 22

Frequently asked questions in Bankruptcy Page 5

Frequently Asked Questions in

Bankruptcy

DISCLAIMER This guide has been produced by the Insolvency Service of Ireland (ISI)

and is intended as a general, introductory, non-technical guide for insolvent debtors in

relation to the availability of, and the processes involved in seeking bankruptcy. If,

after reading this guide, you require further information of a general nature, please

consult the ISI website, www.isi.gov.ie, or contact the ISI’s office at 076-1064232.

The ISI has no role in providing legal advice or interpreting the law and this guide is

not an interpretation of, or advice on the law. In addition, the ISI has no role in

providing financial advice. If you are in doubt in relation to your legal or financial

position, please take appropriate professional advice.

1 General

1.1 What is bankruptcy?

Bankruptcy is a process where the ownership of an insolvent person’s property transfers to the

Official Assignee in Bankruptcy to be sold by him for the benefit of those to whom the individual

owes money (creditors). Bankruptcy proceedings are brought in the High Court. The application for

a Bankruptcy Order is filed in the Office of the Examiner of the High Court. When the person’s

property is sold, the Official Assignee will make sure that the proceeds are shared out fairly among

creditors and any outstanding debt will be written off. Bankruptcy normally lasts for 1 year.

1.2 How much does it cost to go bankrupt?

There is an initial fee of €200 payable to the Official Assignee as a bankruptcy petition fee. On

adjudication the judge will direct that you undertake to pay the cost of publishing a notice of your

bankruptcy in Iris Oifigiúil. The cost depends on the length of the notice but is likely to be in the

order of €70.

1.3 Am I eligible to seek bankruptcy?

In order to be declared bankrupt, you must be insolvent, i.e. you are unable to pay your debts to

creditors, in full, as they fall due. Your debts must exceed your assets by more than €20,000. You

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must have made reasonable efforts to make use of the alternative arrangements to bankruptcy such

as a Debt Settlement Arrangement (DSA) or Personal Insolvency Agreement (PIA) to the extent your

financial circumstances permit you (see www.backontrack.ie).

1.4 What steps do I need to follow to declare myself bankrupt?

1. You must lodge €200 with the Bankruptcy Division of the Insolvency Service of Ireland (ISI) as a

bankruptcy petition fee.

2. You must swear an affidavit stating that you have made reasonable efforts to make use of the

alternative arrangements to bankruptcy such as a Debt Settlement Arrangement or Personal

Insolvency Arrangement to the extent your financial circumstances permit you. This affidavit must

reference your efforts to make use of alternative insolvency arrangements to the Court in the form

of a letter from your Personal Insolvency Practitioner (PIP) or Approved Intermediary (AI).

3. You must present a Statement of Affairs, which will set out your financial situation and it must

disclose that your debts exceed your assets by more than €20,000.

4. You must prepare a petition for bankruptcy in which you must undertake to advertise notice of

your bankruptcy adjudication as directed by the Judge.

5. You must make various statements regarding your Centre of Main Interest (COMI), domicile or

related matters. COMI is defined as being where you conduct your business as reasonably

ascertainable by your creditors.

6. The Affidavit, Statement of Affairs and Petition documents must be stamped, witnessed and

lodged with the Office of the Examiner of the High Court who will assign you a court date for your

bankruptcy hearing. Further details on these documents and how to fill them in can be found in the

“Notes for filling out forms for bankruptcy” section of the ISI website at the following link,

http://isi.gov.ie/en/ISI/Notes

1.5 What happens in court on the day of adjudication?

Once you have been given a Court date you must attend Court on that date – this will take place in

the Four Courts in Dublin. The location/Courtroom number will be published in the Legal Diary,

available on the Courts Service website www.courts.ie. At the Court hearing, if the Court is satisfied

that all of your papers are in order, your initials will be called out by the Court Registrar. At this point

you will stand up and the Judge will adjudicate you bankrupt. The judge will direct that you

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undertake to place an advertisement in Iris Oifigiúil, the Irish State Gazette, and on the Insolvency

Service of Ireland website, within 21 days of the date of adjudication, in order to notify creditors of

your bankruptcy. On the day of adjudication you must produce to the bankruptcy inspector (or email

the Bankruptcy Division of the Insolvency Service of Ireland), a copy of the Statement of Affairs that

you filed with the Examiner’s office. You must also produce a Statement of Personal Information to

the Bankruptcy Inspector. This form will have been issued to you before your court date with your

receipt for the bankruptcy petition fee. This information will help us to more efficiently administer

your estate.

1.6 How long does my bankruptcy period last?

You will automatically be discharged from bankruptcy on the 1

anniversary of your date of

adjudication, unless your bankruptcy term has been extended by the Court due to a failure to co-

operate with the Official Assignee and his staff or a failure to disclose your assets to him.

1.7 What could prevent me from being discharged from bankruptcy?

Discharge can be extended for up to 15 years in cases found by the Court to have involved serious

non co-operation with, or non -disclosure of assets to, the Official Assignee.

1.8 What are the immediate effects of bankruptcy?

When the Court adjudicates you bankrupt, ownership of all your assets will transfer to the Official

Assignee, including your interest in the family home. The Official Assignee will realise (sell) these

assets where there is value and distribute the proceeds among your creditors. Your unsecured

creditors can no longer seek repayment directly from you. They must make a claim to the Official

Assignee and all correspondence should be forwarded to him.

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2 Debts and Assets

2.1 Why is the bank still ringing and writing to me about my mortgage?

Secured creditors retain their rights in bankruptcy and can still contact you whether you are

currently servicing the mortgage or not.

If you are not paying your mortgage, the bank retains the right to apply to the court to sell the

property. If this happens the bank will receive the sale price of the property.

If there is a shortfall between the sale price and the mortgage amount, the bank can make a claim

for the shortfall in bankruptcy but will not be able to pursue you directly for the shortfall amount. It

then becomes an unsecured debt.

You should note that if your spouse/civil partner is named as a party to the mortgage, then they

may be held joint and severally liable. The bank may pursue your spouse/civil partner for the full

amount outstanding.

2.2 What happens to my bank/credit union accounts?

You are allowed to retain €1,000 for reasonable living expenses in the form of cash in your

possession or a current account with a bank. On the day that you are adjudicated bankrupt, all

other accounts held in credit by financial institutions, will be frozen. If you owe debts (credit cards,

mortgage etc.) to the bank that you hold an account with, they may have a right to offset any monies

in your accounts against the debts held. All other monies become the property of the Official

Assignee to whom the funds will be transferred by the financial institution and who will use them

to pay creditors of your estate.

2.3 What will happen to my assets after I have been adjudicated bankrupt?

When the Court adjudicates you bankrupt, ownership of all your assets will transfer to the Official

Assignee, including your interest in the family home.

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2.4 What will happen to the assets in my bankruptcy estate after I have been

discharged?

Under the Bankruptcy Acts 1988-2015, when you are discharged from bankruptcy, your assets

continue to be retained post discharge in your bankruptcy estate for realisation (sale) and

distribution to your creditors by the Official Assignee. The family home continues to vest in the

Official Assignee and he will evaluate the equity position of the property within three years of the

date of adjudication. If the family home is in positive equity he has a duty to creditors of the estate

to realise that equity. He will seek to sell this equity to the former bankrupt or their spouse/civil

partner. If the family home is in negative equity, then the family home will re-vest in the bankrupt

subject to the mortgage.

2.5 Will my name be removed from the Bankruptcy Register at any time?

No - the Register is a record of all bankruptcies, including those that have been discharged. A person

searching the Register must pay €10 for each individual registry search. During the bankruptcy

period, a search will yield the name, address and status of the bankruptcy. Following discharge from

bankruptcy, a search of the bankruptcy register will reveal the name and the date of discharge. No

information is given about the address or other details of a former bankrupt person.

2.6 What types of debt can be included in bankruptcy?

Personal loans, cash loans, credit card debts, business/commercial loans, family maintenance

payments under Court orders, Revenue debts, personal guarantees, unsecured portion of property

loans, trade debts.

2.7 What types of debt cannot be included in bankruptcy?

Court fines in respect of criminal offences, new debts incurred by you after the date you are made

bankrupt.

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3 What do I have to do to aid the Bankruptcy process?

3.1 What are my duties and obligations in connection with bankruptcy?

You must attend Court on the day your bankruptcy application is listed. You must co-operate fully

with the Official Assignee and his staff in all matters relating to your bankruptcy. Ownership of all

your property will automatically transfer to the Official Assignee. You may, having already

completed a Statement of Personal Information and a Statement of Affairs, be interviewed by

Bankruptcy Division staff in relation to your estate. You must publish a notice of your bankruptcy on

the ISI website and in Iris Oifigiúil as directed by the Judge.

You also have other legal obligations in connection with the administration of your estate and

assets. These include: the delivery of your accounts or documents to the Official Assignee when

requested, the delivery of your title deeds to property and any other assets to the Official Assignee,

assisting the Official Assignee in the administration of your estate, and disclosing any property

acquired by you since the date of your bankruptcy order to the Official Assignee. You must also

inform the Official Assignee if you change your address.

3.2 Do I have to complete every section of the Statement of Affairs/ Statement of

Personal Information forms?

Yes, you must complete every section of the Statement of Affairs and Statement of Personal

Information. These list your contact details, your family circumstances, your assets, liabilities and

income and are vitally important to the effective administration of your bankruptcy estate. All fields

must be filled in and if they do not apply, you should write n/a (not applicable). By filling in the data

in a clear and thorough manner, you will minimise the need for the Official Assignee to contact you

via phone or email. In those cases where it is felt that the information provided is insufficient or

evasive, the case will be passed to our investigations team for further examination.

3.3 Who manages my estate?

There are a number of different teams within the Bankruptcy Division of the ISI who administer

estates on behalf of the Official Assignee. These teams include:

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Finance: You will be in contact with representatives of the Finance Team when you pay your petition

fee.

Courts: You will meet representatives of the Courts Team at court on the day of adjudication. You

must provide them with your personal contact details. You will also need to contact Courts Team to

advertise your bankruptcy on the ISI website.

Case Management: This team records information provided in your written Statement of Affairs

and Statement of Personal Information. They will contact you to clarify information provided or

follow up where information is missing. The Case Management Team deals with claims for existing

debt submitted by creditors.

Non-property Assets: The function of this team is to realise all non-property assets (cars, pensions,

jewellery, and furniture) for the benefit of your creditors.

Property: The Property Team administer all properties in your estate. All residential investment

properties vest in the Official Assignee and will be realised for the benefit of your creditors.

Investigations: This team review potential non-declaration of assets as per the sworn Statement of

Affairs and assets that were transferred prior to adjudication with a view to recovery in the event

that there may be value for the creditor of the estate.

Income Payment Assessment (IPA): This team assesses your income and sets it against your

Reasonable Living Expenses to see if you are in a position to give a portion of your income for

distribution to the creditors of your estate

Over the course of your bankruptcy you may have contact with representatives from each of these

teams.

4 How does bankruptcy affect my day to day life?

4.1 Are any assets exempt from my bankruptcy?

The role of the Official Assignee is to investigate the full extent of your property and sell or otherwise

dispose of your property and distribute the proceeds to your creditors. The only assets that do not

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transfer to the Official Assignee are essential assets up to a value of € 6,000 (including vehicles), or

more, if the High Court allows. You must identify which assets you wish to keep (Work tools, car,

etc.). Any property you acquire during the period of your bankruptcy transfers to the Official

Assignee if and when the Official Assignee claims it and you are under a legal duty to declare such

acquired property to the Official Assignee.

4.2 Can I obtain credit from someone while I am bankrupt?

If you obtain credit of € 650 or more without disclosing your bankruptcy to the credit provider, you

are guilty of an offence under the Bankruptcy Acts 1988-2015. You should be aware that being

bankrupt may affect your credit rating and may influence any information about you held by rating

reference agencies such as the Irish Credit Bureau. This means you may find it more difficult to get

credit in the future.

4.3 Can I operate a bank account while I am bankrupt?

Yes, you can operate a bank account. Maintaining a bank account is an essential requirement in the

normal course of living and will assist you in vouching your income and expenses. Whilst the Official

Assignee notifies financial institutions that bankruptcy legislation does not prevent persons made

bankrupt from holding or operating a bank account, it is a matter for the financial institution itself

to decide whether it still wishes to keep you as a customer. Generally, financial institutions do

continue to keep their customers who are made bankrupt, although they may impose conditions on

the nature of accounts they may hold. You are allowed to retain €1,000 for reasonable living

expenses in the form of cash in your possession or a current account with a bank. Please note that

all other bank accounts will be frozen on the day of adjudication. If you owe debts (credit cards,

mortgage etc.) to the bank that you hold an account in credit with, they may have a right to offset

any monies in your accounts against the debts held.

4.4 Can I travel outside the jurisdiction while I am bankrupt?

There is no outright prohibition on you travelling abroad but you must inform the Official Assignee

if you intend to do so. However, if it appears to the High Court that you may be leaving the State in

order to avoid the consequences of your bankruptcy, you may be arrested.

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4.5 Will details of my bankruptcy be published anywhere?

Yes – notification of your bankruptcy will appear in Iris Oifigiúil, on the ISI website and the Register

of Bankruptcies maintained by the Office of the Examiner of the High Court.

4.6 Will bankruptcy affect my employment?

You can usually continue in current employment or seek new employment while you are bankrupt.

Under the Companies Act 1963, as amended, it is an offence for a bankrupt person to act in various

capacities in relation to a company without the consent of the Court. These capacities include

director, auditor, manager, liquidator or receiver of a company. Certain professions may be

governed by bodies where members’ personal finances are subject to regulatory requirements.

5 Income Payment Assessments and Orders

5.1 How is my income payment contribution assessed?

Your income is set against your Reasonable Living Expenses (RLEs). The ISI believes that you are

entitled to a reasonable standard of living while you address your debt problem. If you tackle your

debt using one of the ISI’s solutions, there is a reasonable standard of living that you are entitled to

which allows for expenses such as food, clothing, health, household goods and services,

communications, socialising, education, transport, household energy, childcare, insurance and

modest allowances for savings and contingencies. Further details can be found at

http://www.isi.gov.ie/en/ISI/RLEs_Guidelines. Your RLE allowance is deducted from your income

and any surplus figure is paid to the Official Assignee on a weekly or monthly basis (as agreed

between you and the IPA team) for distribution to the creditors of your estate.

The Official Assignee will seek a contribution from your income after applying the Insolvency Service

of Ireland Guidelines on Reasonable Living Expenses, if there is surplus income available. These

guidelines take a person’s family situation into account when calculating how much of his/ her

surplus income (if any) can be paid to the Official Assignee. The High Court, in determining what, if

any, contribution it may require you to pay, may also have regard to the ISI Guidelines. An Income

Payment Agreement/Bankruptcy Payment Order will last for 3 years and ideally should be agreed

to at the earliest stage of bankruptcy. This is to ensure that you as a bankrupt person are subject to

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it for the shortest period possible after your bankruptcy has been discharged. Social Welfare

payments are not liable to be taken by the Official Assignee or the Court; however, if the bankrupt

is receiving social welfare payments plus other income and the total funds received exceed ISI

thresholds; the surplus will be taken by the Official Assignee as a contribution towards bankruptcy

estate debts.

Example:

A couple with two children aged 5 and 7 years old and one car. They are earning €2800 per month

and are paying an €800 mortgage payment per month. By inputting their marital status, number

and age of children, their need for a car and their mortgage responsibilities into the Reasonable

Living Expenses calculator at www.backontack.ie we arrive at an RLE figure of €2615. 07.

Income: €2800

RLEs: €2615.07

Total: €184.93

There is a total of €184.93 surplus income per month left to service debts over a 36 month period.

5.2 What is the difference between a Bankruptcy Payment Order and an Income

Payment Agreement?

Your initial assessment will result in an Income Payment Agreement. This is an agreement drawn up

between you and the Official Assignee, where there is surplus income available for distribution to

the creditors of your estate. This agreement will be formalised through the Court during the period

of your bankruptcy, at which point it becomes a Bankruptcy Payment Order.

5.3 What happens if my financial circumstances change during my bankruptcy?

If your financial circumstances change you must notify the Official Assignee and the terms of your

Income Payment Agreement/Order may be altered, to take account of this. Your financial

circumstances may be reviewed periodically throughout your bankruptcy and you will be obliged to

complete an income and expenses form to assist in the assessment.

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5.4 How long will I have to make payments for?

An Income Payment Agreement and then Bankruptcy Payment Order lasts for 3 years and ideally

payment terms should be agreed to at the earliest stage of bankruptcy. This will ensure that you as

a bankrupt person are subject to it for the shortest period possible after your bankruptcy has been

discharged. In cases of non-compliance, the Bankruptcy Payment Order period can be extended to

five years.

5.5 I have a Bankruptcy Payment Order but my circumstances have changed, what do I

do?

If your financial circumstances change, you must notify the Official Assignee and the terms of your

Bankruptcy Payment Order may be altered, to take account of this. Variance of an order has to be

formally done through the Courts. The Court may at any time, on the application of any interested

person, vary an order, having regard to any changes in the family responsibilities or personal

situation of the subject of the order. The IPA team can provide information on how to start the Court

process.

5.6 Why weren't all my expenses included in my income assessment?

Not all expenses are deemed admissible There are certain special circumstances admissible under

Reasonable Living Expense guidelines. Further details can be accessed at,

http://www.isi.gov.ie/en/ISI/RLEs_Guidelines.

5.7 What is considered reasonable for housing costs?

Housing (mortgage or rent payments) vary across the country and cannot be applied universally like

the set costs. These costs will be added to your set costs provided they are determined to be reasonable

by the Official Assignee.

6 Self Employed, Business Partnerships and Pensions

6.1 Can I still trade while I am bankrupt?

Unless there are legal restrictions on un-discharged bankrupts practicing in your profession, you can

continue to work and earn a living as before. However, you cannot use assets (other than excepted

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articles) which you owned at the date you were adjudicated, as ownership of these assets transfers

to the Official Assignee. You must trade in the same name in which you were made bankrupt. If you

trade in a name other than that in which you were made bankrupt without disclosing this name,

you are guilty of an offence. You must notify the Official Assignee of any business or trade in which

you engage.

6.2 I am self employed, what are my obligations to the Revenue Commissioners?

When you are adjudicated bankrupt, the Revenue Commissioners are informed and will be in

contact with you. It is in your interests to agree your tax returns at the earliest possible date

following your adjudication. The Revenue will calculate what you owe them up to the date of

adjudication and claim for this figure in bankruptcy. The Official Assignee, as part of his duties in

administering your estate, will pay a dividend to Revenue where funds are available. Any taxes

incurred after the date of adjudication are not part of your bankruptcy estate and you must file your

returns, make payments and fulfil your obligations to the Revenue Commissioners as normal. Please

note that any monies due back to your estate from the Revenue Commissioners, in the form of

refunds, become the property of the Official Assignee.

6.3 How will bankruptcy affect business partnerships?

When a partner is adjudicated bankrupt, the partnership is automatically dissolved unless the

partnership agreement provides otherwise. Partnership assets are first used to pay partnership

debts and if there is any surplus remaining, then and only then can they can be used to pay a

bankrupt partner’s debts out of his share of such surplus.

6.4 What happens to my pension?

The rules governing how the Official Assignee approaches pensions were revised on 03/12/2013

removing most pension funds from vesting in the Official Assignee. If you were adjudicated

bankrupt on or after this date the following guidelines apply.

Generally, your pension assets are not transferred to the Official Assignee. However, pension

income receivable by you will be treated as income for the purposes of your bankruptcy.

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Approved Retirement Fund (ARF) and Vested Personal Retirement Savings Accounts (Vested PRSAs)

may be included in your bankruptcy estate for realisation and payment to your creditors.

Where a bankrupt person has made excessive contributions to a pension scheme in the three years

before being adjudicated bankrupt, the Official Assignee may apply to Court for an order to make

the excessive amount available for distribution to the creditors.

If however, you have a pension entitlement that has matured on adjudication or will mature within

five years of your bankruptcy order, the Official Assignee will have the right to claim it for the benefit

of the bankruptcy estate.

If you were adjudicated bankrupt before 3/12/2013, all funds other than the occupational pension

scheme funds vested in the Official Assignee. Please contact this office to discuss the criteria applied

in those circumstances.

7 Property related issues within Bankruptcy

7.1 How will property owned jointly with a bankrupt person be affected?

Where a person owns property jointly with a bankrupt person, the bankruptcy splits the joint

ownership. The non bankrupt co-owner and the Official Assignee then hold separate interests in the

property and the Official Assignee will have the right to sell the property to realise his half share.

7.2 What will happen to my family home?

You should be aware that bankruptcy can result in the loss of your home. Serious consideration

should be given to this fact when considering bankruptcy. You should always seek to obtain

independent professional advice before entering the bankruptcy process. The Official Assignee has

a three year period from the date of adjudication to monitor the valuation of your family home to

ascertain whether it is in negative or positive equity. The Official Assignee, having valued your family

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home, will write out to you six months before the three year period elapses and inform you whether

he believes your property is in positive or negative equity.

Where your interest in your family home is in positive equity, the Official Assignee has a duty to

your creditors to realise this interest. In order to value the Official Assignee’s interest in the

property, we will arrange for a further professional valuation of your property. You are entitled to

seek your own independent valuation as well.

The policy of the Official Assignee is to sell his interest in positive equity family homes to the

bankrupt. Alternatively, he will sell his interest to the bankrupt’s spouse/civil partner. The Official

Assignee will accept staged payments for up to a maximum of 12 months and on final payment will

transfer his interest to the bankrupt or their spouse/civil partner. If the bankrupt or spouse/civil

partner is unwilling or unable to purchase the Official Assignee’s share, he will apply to the Court

for permission to sell the home on the open market. It should be noted that the Official Assignee, is

not entitled to sell your estate or interest in your home, without an order of the High Court under

Section 61(4) of the Act.

If your interest in your family home is in negative equity and the Official Assignee has not issued

proceedings seeking sale of the family home within 3 years of the date of adjudication of

bankruptcy, the family home may re-vest in you, subject to any existing mortgage. If you do not wish

the property to re-vest in your name, you should communicate that to the Official Assignee in

writing.

7.3 I have received a letter saying that my family home is transferring back to me. I am

happy to have it back as I am still living there with my spouse/partner but I do not

know what will happen about the mortgage as I have not paid it for quite some time.

Your interest in your family home automatically transfers without need of any conveyance back to

you, as does the mortgage. If you default on your mortgage loan payments, the mortgage lender

can still sell your home on foot of the mortgage but it cannot recover against you any shortfall

amount between the mortgage amount and the net sale proceeds recovered. However, if your

spouse/partner is also a party to or has guaranteed the mortgage loan, the mortgage lender would

still be able to seek payment of the shortfall sum from him/her where he/she has not been

adjudicated bankrupt.

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7.4 I do not want my family home back. What should I do?

There is a mechanism that prevents your family home transferring back to you. The Official Assignee

will contact you before your family home is due to transfer back to you. The letter will confirm that

the Official Assignee has found your family home to be in negative equity. A form will be enclosed

for you to fill out which will prevent the family home’s transfer back to you. As stated above, if the

mortgage payments are not being paid the mortgage vendor can sell the property but it cannot

pursue you for any shortfall between mortgage debt and net sale proceeds, as such shortfall was

written off on your bankruptcy.

7.5 I am separated from my spouse/partner who was bankrupt. However, I am not a

bankrupt. My spouse/partner is named on the mortgage. I have just been told that

the half share of my family home is going back to him/her. My spouse/partner left

me and doesn’t live in the home. I am in the family home paying the mortgage, with

no support from my spouse/partner and I do not want him/her getting back his/her

half share.

The Bankruptcy Act was amended as of 29 January 2016 and the changes to the Act mean that the

Official Assignee, subject to certain exceptions

, must allow negative equity family homes to transfer

back to the bankrupt. If your family home is in negative equity, under bankruptcy legislation it will,

legally, go back to your spouse/partner. It is a matter for yourself to seek legal advice on your rights

under Family Law to have that half share transferred to you by a Family Law Court.

There will be no automatic re-vesting where:

a) The Official Assignee and the bankrupt agree in writing that the property does not re-vest.

b) The Court orders that the property does not re-vest.

c) The Court extends the 3 year period and re-vesting does not happen until the date the Court specifies.

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7.6 My spouse/partner who I am separated from has rang me to tell me that he/she

has informed you that he/she does not want the family home back. I am still

living in the family home and I am paying the mortgage, what happens to my

home now?

 Positive Equity Property

The policy of the Official Assignee is to sell his interest in family homes in positive equity to the

bankrupt or their spouse/civil partner. In your case, he would seek to sell his interest to you, the

bankrupt’s spouse/civil partner. You would have to pay 50% of the equity figure. The Official

Assignee will accept staged payments for up to a maximum of 12 months and on final payment will

transfer his interest to you. If you are unwilling or unable to purchase the Official Assignee’s share,

he will apply to the Court to get the necessary permissions to sell the home on the open market. It

should be noted that the Official Assignee, is not entitled to sell your estate or interest in your home,

without firstly obtaining an order of the High Court under section 61(4) of the Bankruptcy Acts 1988

– 2015.

 Negative Equity Property

If the interest in the family home of your spouse who is a bankrupt (or now a discharged bankrupt)

is in negative equity and the Official Assignee has not issued proceedings seeking sale of the family

home within 3 years of the date of adjudication of bankruptcy, the Official Assignee’s interest in the

family home will automatically re-vest in (transfer automatically back to) the bankrupt on the third

anniversary of their adjudication. If, as in this case, the bankrupt indicates that they do not wish

their interest in the property to re-vest in their name, he/she must jointly sign a form with the

Official Assignee, stating that he/she does not wish the property to re-vest.

At this point the Official Assignee will decide to disclaim his interest in the property. This means that

he will, through the Courts, formally renounce his interest in the property. All parties interested in

the property are put on notice of these Court proceedings. The parties may include the Mortgage

Bank, the spouse/civil partner who is servicing the mortgage and living in the property and any

judgment mortgage holders. The Courts will then remove the Official Assignee from title and it is

Frequently asked questions in Bankruptcy Page 21

open to you, on proving you are servicing the mortgage, to apply to the Court at the hearing to have

the disclaimed half interest transferred to you by Court order.

The ISI strongly recommends that you engage professional legal advice to guide you through this

process and ensure that you have the necessary proofs for the Court to succeed in any such

application.

7.7 I have a tenant in a residential investment property that I owned pre-bankruptcy.

What do I have to do?

When the Court adjudicates you bankrupt, ownership of all your assets will transfer to the Official

Assignee. You have an obligation, under the terms of the Bankruptcy Acts 1988-2015, to inform us

where you have a sitting tenant in an investment property. Failure to inform us of a tenancy

agreement and retention of rent monies post adjudication could result in an extension of the

bankruptcy period for up to 15 years. When you inform us of a tenancy agreement, we require that

you provide us with the keys to the property, a copy of the lease agreement and the contact details

of the tenant. We will then write out to the tenant explaining the situation to them and informing

them that they must now pay their rent directly to the Official Assignee’s rental agents. The monies

received from the rent payments will be used towards paying a dividend to the creditors in your

estate.

7.8 How will property that I own abroad be affected?

Under the European Community Insolvency Regulation, bankruptcy proceedings in Ireland may be

recognised as insolvency proceedings in all European Community Member States (except Denmark),

where the centre of main interest (COMI) of the bankrupt person is within Ireland. COMI is the place

where you primarily conduct your business on a regular basis, as reasonably ascertainable by your

creditors. The Official Assignee, under the European Community Insolvency Regulation, is entitled

on foot of the Bankruptcy Order here to realise property of the bankrupt person across the

European Community for the benefit of creditors. Where the bankrupt person’s centre of main

interest is in another EU country (except Denmark) but they have an establishment (business) within

Ireland, then secondary proceedings may be instituted here but only to administer the estate of the

bankrupt person within Ireland. The Official Assignee can equally enforce his bankruptcy order

Frequently asked questions in Bankruptcy Page 22

outside the EU and in Denmark, by obtaining an “order in aid” in the Courts of the relevant foreign

country.

7.9 How does bankruptcy affect property transferred by the bankrupt person?

Bankruptcy has legal implications for property transfers made before the date of the Bankruptcy

Order. The Official Assignee can review, and possibly challenge, any property transfers made before

bankruptcy. He may apply to Court to set aside these transactions by the bankrupt. The Official

Assignee will apply to void pre-adjudication transfers where they were done to reduce bankruptcy

estate assets and defraud the entitlements of creditors to have same sold to pay their debts.