I have just returned from a trip to Dublin to meet with my partners irishbankruptcyuk.ie . It was a sobering experience as they introduced me to clients they had signed up for the bankruptcy process, solicitors who were trying to deal with ever increasing hard handed approaches from lenders and just ordinary people who are trying desperately to work out what they should do.I had a round of meetings with people who were in differing degrees of financial meltdown, from a couple who had negative equity in excess of €500,000 on their matrimonial home and an investment. With the husband on short time and the wife not working, making mortgage payments is proving impossible. They do not want to carry the burden of this debt around with them for the rest of their lives. Their decision is to take their family and move to Northern Ireland and try to start again. In a few months time once they are settled they will look to go bankrupt and close a chapter on their property venture.
I met another client who had done very well in the property construction sector. He had made his money but like many others was encouraged by his bankers to take on more and more debt to buy more land to develop. When the credit crunch hit after the collapse of Lehman Brothers, he fund he couldn’t sell the properties he had constructed. He couldn’t make repayments on his loans and he defaulted. He has sat down with his bank, but they have simply said that he has to make payments. He owes many millions. How is he supposed to do that? There is no magic pot of money he can go to. He is leaving Ireland and coming to live in England. He is getting out of construction and seeking a new job. In due course he will take measures to go bankrupt. He doesn’t like to do it but how else is he going to get rid of millions of Euro of debt.
I met a solicitor who now advises her clients on how they can go bankrupt in the UK, whilst at the same time trying to do deals with banks to write of debt that will never be repaid. She says that there may be loopholes in some agreements, if this is accepted by the banks in individual cases there may be a chance to get the loans wiped. If not, her clients will have been living in the UK long enough to go bankrupt if they so wish.
With bankruptcy in Ireland not being a realistic option, many are looking to move to Northern Ireland and mainland England, establish their lives here and then avail themselves of the friendlier UK bankruptcy regime. With over 1000 people a week in the UK going bankrupt and that many again also doing an IVA or a debt relief order, compared to just 29 people in a whole of a year going bankrupt in Ireland, you can see where the solution lies.
So nothing has changed. Despite the changes made to Irish Bankruptcy laws, which will be implemented shortly, there will still be hundreds if not thousands of people who will seek to move across here to England to go bankrupt rather than go bankrupt in Ireland for three years and risk the probability of a five year income payments order at the end of that. Who wants to potentially make payments to creditors for up to eight years. No one if what I am hearing from my Irish clients is anything to go by.
