The Northern Ireland Insolvency legislation was updated in March 2006 to bring it into line with the revised UK legislation which had been updated in 2002 and 2004. 

 The main changes to the bankruptcy law was as follows

·        Nearly all bankrupts will obtain an automatic discharge  after a maximum of one year (previously three years)

·        Bankrupts may be required to make regular payments  out of any surplus income for up to three years 

·        A bankrupts trustee has three years to sell or realise his interest in the bankrupts property, if greater than £1,000, otherwise this interest will be returned to the bankrupt

·        A fast track IVA supervised by the Official receiver is available for people who are already bankrupt

·        There will be a reduction in the number of restrictions that are automatically imposed on undischarged bankrupts (eg holding office as a JP or member of Parliament)

·        Bankruptcy restriction orders can be imposed, lasting for between 2 and 15 years, as a means of restricting the activities of those bankrupts deemed to be culpable. 

·        In September 2003 the Inland Revenue & Customs & Excise preferential rights to be paid before unsecured creditors were abolished in Great Britain. However in Northern Ireland they continued to have preference over other unsecured creditors until March 2006, when this preference was abolished

Initially opinion in the UK suggested that the new legislation would cause a significant increase in bankruptcies to the detriment of individual voluntary arrangements, however actual UK figures showed that this was not the case.

Individual Voluntary Arrangements were originally introduced as part of the rescue culture and figures indicate that successful IVA’s produce up to 51p in the £ compared to 22p in bankruptcy and are used by both individuals and in business but mainly by people seriously out of their depth with consumer debt repayments.  It is particularly beneficial where the family house or other assets are at risk, but is unlikely to be suitable for anyone with debts less than £20,000.  

The experience in our business is that the majority of individuals with debt problems do not simply wish to walk away from their obligations. Many seek help from  an insolvency practitioner to act as broker with their creditors to agree fresh terms for realistic settlement of their debt. This will normally involve an element of debt forgiveness to give creditors back something, rather than nothing in bankruptcy.

Going bankrupt is not a soft option. We are pleased to give advice to businesses or individuals with problems as to the options available to them before taking any decisions.