Posted 22 February 2016 By Steve Elliott, Business Recovery and Insolvency Partner
In Business Recovery & Insolvency
They say that “imitation is the sincerest form of flattery” and the Republic of Ireland have just revised their personal insolvency legislation for the second time in 3 years to now virtually mirror that of the UK.
In 2009, there were only 15 bankruptcies in Ireland, where the bankruptcy regime was quite harsh in modern terms, with bankruptcy restrictions lasting 12 years. The first revision to a term of 3 years did not have the expected impact and the bankruptcy period has now been further reduced to 1 year with other provisions on income payments (now 3 years) and provisions for re-vesting of a matrimonial home with no/minimal equity in 3 years, as in the UK.
Unsurprisingly, insolvency professionals in Ireland are reporting a great influx of personal insolvency enquiries but annual numbers are still only expected in the very low thousands!
Contrast this with the recently published personal insolvency statistics for England & Wales; a total of 79,965 personal insolvencies were recorded in 2015, (the lowest annual total since 2005 - 67,584 cases) and also down by nearly 20% compared with 2014. However, that is still a total of 209 people per day entering a formal insolvency process and the problem of consumer debt is building apace again.
UK residents owed £1.455 trillion at the end of December 2015 and whilst down £4.7 billion from November, that’s not much compared to the debt growth of nearly £200 billion in the last four years.
Also, Financial Conduct Authority research has found that more than 600,000 Debt Management Plans are running each year and fees for debt management plans are estimated to be £25 million annually. Christopher Woolard, the FCA’s director of policy, risk and research says:
“It’s frankly unacceptable that … people who are struggling to make ends meet are being talked into unsuitable plans.”
The FCA will take some time to make a significant impact in this sector and it is important that individuals with debt problems get proper advice from someone local who knows what they are talking about meanwhile.
To discuss this or anything else contact Steve Elliott on 01793 818300 or send him an email.