- DUBLIN: Ireland has cut the time needed to be discharged from bankruptcy to five years from 12, the government said, a reform required under its EU/IMF bailout to help deal with a mountain of personal debt.
The bursting of a huge housing bubble has left swathes of the population in negative equity, many with debts they will likely never pay.
But one of the most stringent bankruptcy regimes in Europe has made it an unpalatable option.
Under the new rules, which came into effect on Monday after passing parliament in August, bankruptcies in existence for 12 years or more will be automatically discharged.
Justice Minister Alan Shatter said further reforms of personal insolvency law would be introduced early in 2012 to meet commitments under an 85 billion euro EU/IMF agreement.
“The commencement of these new discharge provisions completes an important first stage of the modernization of our personal insolvency regime,” Shatter said in a statement.
Irish household debt is 129 percent of GDP, the highest level in the industrialized world, according to IMF data. Data released in August showed that 12 percent of Ireland’s residential mortgage market was either in arrears or had been restructured.