How can we help?
Being Insolvent means that you cannot pay your debts as they fall due.
Karl O’Daly is a Personal Insolvency Practitioner. The PIP can be compared to a state bankruptcy auditor in Germany. Karl has worked for a number of International Banks including Deutsche Bank, Goldman Sachs, Citibank and HSBC. Unfortunately Karl despite his German name does not speak German.
As a matter of EU law, you are entitled to work and travel across the whole of the European Union. The employment prospects in Ireland are really good. Wages tend to be higher than Germany, but the cost of living is also in the bigger cities.
A lot of German Nationals over the last few years went to the United Kingdom and whilst there took the opportunity to go bankrupt. After Brexit Ireland will have the most favourable Bankruptcy regime in the European Union.
Should you wish to relocate to Ireland for work or educational purposes and then also seek assistance for your debts we will be able to help you.
Advantages of the
Irish Insolvency Process
The Insolvency Regime in Ireland is very favourable in comparison to Germany. The process is cheaper, less complicated, quicker but also allows you can maintain a better standard of living in comparison.
Your expense allowance for day to day to day costs are higher than Germany and can also be varied if you have children or dependents.
You also are provided a further allowance for accommodation. Typically, the Bankruptcy official will assess your housing needs in the location where you wish to live. Normally you can expect to be given an allowance for an average Rental property in the area. Further, if you have unique or special circumstances your allowance can also be increased to cover costs such as childcare or rehabilitation costs if physio needed etc.
The important thing is nobody tells you where to live. In Germany my understanding is the allowance is really small so you can’t have good accommodation. There is a German expression you might call this “Wo Sich Fuchs und Hase gute Nacht Sagen”. You do not have to live in the middle of nowhere if you do not want to. The allowance you are given is reasonable so you do not have to live 100km outside the City if you can find accommodation at appropriate cost in the city. You will be allocated a budget for average rental costs.
These expenses allocation is known as Reasonable Living Expenses. Whilst you are in an Insolvency Procedure you are required to live on this Budget. Any money you earn above this is paid to the Bankruptcy official who then distributes the funds to your Creditors.
does it take?
If you have insufficient income after all your Reasonable Living Expenses your Bankruptcy can be a short as 1 year. If you have excess Income above expenses your Bankruptcy period will be 3 years.
Unlike Germany also, nobody tells you which job you need to do. The job you do to support yourself correlates to a certain extent with the length of your bankruptcy. If you are happy to do a job to earn enough money to pay your rent and living expenses, then your Bankruptcy period can be very short about 1 year. Otherwise you will be subject to a Bankruptcy payment order for 3 years.
The period of cooperation with the bankruptcy official is 1 year or 3 years if you are selling property.
Debts which can be
written off in Irish Bankruptcy
Unsecured and secured debt such as mortgages for family homes or Investment properties, Personal Guarantees, Trade Debts, Business loans and Credit card loans can be included in your bankruptcy. Unlike Germany you can also write off Revenue or Tax Debt.
Examples of debt that cannot be included would be court fines in respect of criminal offences, or any new debts you accumulate after the date you are made bankrupt.
What does it mean
to be declared bankrupt?
When you are declared bankrupt, your property and possessions are transferred to a person called the Official Assignee, who is based in the Bankruptcy Division of the Insolvency Service of Ireland.
The Official Assignee then arranges for those items to be sold and the money generated from the sale is distributed to the people you owe money to – your creditors. The Official Assignee will also deal with your creditors for you, so this will put an end to any demands from your unsecured creditors for unpaid debt – no more calls, letters or visits.
When you are made bankrupt you are entitled to have a reasonable standard of living. This includes food, clothing, education, healthcare and a modest allowance for savings. Under the ISI model, this means a higher standard than merely living at a subsistence level, which people often exist on when in debt.
If you have money left over after what is defined as a reasonable standard of living, you will have to contribute that remaining money to the Official Assignee for a period of up to 3 years.
You can retain personal assets of up to €6,000 and “tools of the trade” if any that are needed for work purposes.
Are you Eligible and what is the
Centre of Main Interest (“COMI”)
There are 3 basic criteria:
- You are Insolvent and cannot pay your Debts as they fall due.
- Your Debts exceed your assets by €20,000.
- Your Centre of Main Interest is in the Republic of Ireland.
There are no hard and fast rules to say how long it takes to establish a centre of main interest in the Republic of Ireland. However, a period of greater than 6 months is generally deemed as sufficient. In line with article 13 of the EU Insolvency Directives you would need to establish that you administrate your interests on a regular basis from that location and is ascertainable by third parties. The fact that you are habitually resident in Ireland may not be sufficient if you conduct business elsewhere.
Under the EU Insolvency Directive “Forum shopping” is not allowed under EU law. Despite this it is important to explain why you can still avail of Bankruptcy in Ireland.
While there is a right to every citizen of the European Union to establish a place of residence and a business within every Member State, the rights of freedom of movement and of establishment, the rights conferred by European law are not to be abused. You are of course free to move and work in Ireland just follow the process correctly. Short Cuts make long delays.
So, if you are going to relocate to Ireland you can not necessarily manage a company or work for a Company in Germany remotely. You certainly need to ditch your German Mobile Phone. You need to work here, whilst you may find it attractive to set up as a sole trader you should not have exclusively German clients, you would need to have also Irish Clients. You need to sever your economic and employment link from Germany. Similarly, if you wished to pursue further education it is your right to also do so, but you should possibly also consider getting a small job to support yourself while you are here.
Comparatively in Ireland the process is short do not do stupid things to put it at risk after doing the hard work. Whilst you are in the Bankruptcy procedure you should inform the Official Assignee if you have to go back to Germany for a holiday or family event otherwise stay the 1 year.
Other Debt Relief schemes
and my responsibility
I have a legal duty to the court. I am also independent.
There are other legal schemes that are effective means of writing off debt that are legally binding. They are called Debt Settlement Arrangements (Unsecured Debts) and Personally Insolvency Arrangements (Both Secured & Unsecured Debts). You can avail of these if you are resident in the country for longer than a year. They can ensure a quicker resolution of your debts, but a majority of your Creditors need to agree to a proposal.
Importantly, If you are resident longer than a Year, I am forced to make a reasonable effort to try and resolve your debts by one of these means first. With Bankruptcy you can achieve the same or better results after 6 months residency. I am required to certify to the Court that bankruptcy is a suitable solution to resolve your debts.
Should you wish to make an appointment to discuss Irish Bankruptcy procedure you can book a consultation on the website. The cost will be €150 plus VAT for 30 mins or €280 plus VAT for an Hour.
After your consultation, should you wish to proceed we can discuss next steps. WE encourage you to seek advice from one of our partners in Germany also.
Unfortunately, whilst Karl know some things about German Insolvency he is not an expert but I work with the following legal firms in Germany who may be in a position to better advise you the advantages and the German position or reality. I have discussed with them at length the Irish process.
We suggest that you consult with Mr Jörg Franzke a German Insolvency specialist in the first instance. He can also advise you regarding your options under the Insolvency Process in Germany his contact details are below
Rechtsanwalt | Partner
Dols | Franzke
Rechtsanwälte und Notar
Schlüterstrasse 53, 10629 Berlin
Tel: +49 30 30 61 23 45
AG Charlottenburg PR 938 B
We also partner with a relocation firm. They will assist you in finding local accommodation, jobs, employment, registration for social security and voting. They will also advise you on the cheapest Utility providers and can assist you with a translator if your English is not perfect for your Interview with the Bankruptcy Examiner’s office.