- What are the requirements in declaring bankruptcy
In order for a debtor to petition for bankruptcy they must now show to the court that:
i) they have tried to make an arrangement through the insolvency process or have a personal insolvency practitioner (PIP) inform the court that such a process would fail if tried
ii) they must have at least €20,000 worth of debts and
iii) they, if not resident in the state prior to bankruptcy petition, must have a business in the state, have lived in the state at least up to 12 months prior to declaring bankruptcy or are currently ordinary resident in the state.
- Costs of bankruptcy
The costs of a petition to make a debtor bankrupt can be significent if taken by a creditor. This high cost can often be used by the debtor in a negotation process to try and come to some agreement with a creditor in the event that a debtor is unable to pay their debts. The costs associated with a bankruptcy petition are:
i) Debtor petition
For a debtor to petition for bankruptcy there are various filing fees which amount to approximately €175 and the debtor will have to lodge €650 with the court to cover the OA costs.
ii) Creditor petition
If a creditor wishes to petition for a debtor to be declared bankrupt they will have to apply to the high court to have the petition heard which is costly. It is usually necessary to show that other processes have been engaged in by the creditor such as judgement orders for the court to give serious consideration to a bankruptcy petition. Such costs will run into thousands and even tens of thousands so it is a very expensive option for creditors and a significant reason for the creditor to deal with a debtor prior to bankruptcy.