Bankruptcy is a procedure if you are unable to pay your debts. In this instance you will apply to become bankrupt. Bankruptcy proceedings can be commenced without obtaining judgement but it is preferable to have obtained judgement first. The object of bankruptcy law is to hand over assets, liabilities and affairs of the bankrupt to a Trustee or Assignee for the purposes of releasing the bankrupt individuals’ assets and then distributing the proceeds of the sale amongst the creditors.

Bankruptcy proceedings can be very tedious and expensive. When applying to be made bankrupt the advertising, solicitor’s and counsel’s fees in relation to two separate high court attendances (assuming the bankruptcy is not appealed by the debtor ) the total costs will almost certainly exceed €6,000. As you can see applying to be made bankrupt is not a cheap process.

The first step in bankruptcy proceedings is that an ‘act of bankruptcy’ must be committed by the debtor and the creditor must be able to prove it to the court. If Judgement has not been obtained by the creditor a formal notice of demand called particulars of demand and notice requiring payment prior to the issue of

a bankruptcy summons’ form must be forwarded to the debtor by post. A certificate of posting should be obtained at the time of posting. The debtor has four working days to respond to this notice in relation to you applying to be bankrupt.

If no response is received, the creditor may proceed to apply to the court for the issue of a bankruptcy summons. A bankruptcy summons will only be issued when it is proved that the creditor has exhausted all other means of execution of the judgement.

A bankruptcy summons must be served within 28 days of issue by delivering to the debtor a sealed copy of the summons together with a bankruptcy summons affidavit. The summons server must endorse int eh summons the day and date of service. The service the debtor has a period of 14 days to make a payment of to apply to the court to have the summons dismissed.

If no such application is made and the debtor has not paid the debt within the time limit, he is deemed to have committed an ‘act of bankruptcy’ and the creditor is not in a position to petition to the high court to adjudicate the debtor bankrupt.

The creditors petition must be made within 3 months after the date the ‘Act of Bankruptcy’ has taken place.

On presentation of the petition proving the debt and the act of bankruptcy, the Examiners office will allocate a date for the hearing of the petition. A copy of the petition must be served personally on the Debtor at least 7 clear days before the hearing.

If the petition is successful an Order of Adjudication is signed by the Bankruptcy judge and a copy of this order forwarded to a bankruptcy inspector who serves a copy on the bankrupt. The bankrupt has 3 days from the date of service to appeal against the order. Once adjudication occurs all property belonging to the bankrupt automatically vests in the official Assignee for the benefit of his creditors and the Adjudication is published by the petitioner in Irish Oifigiuil and at least 1 daily newspaper.

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