Ireland overhauls bankruptcy rules as it updates regulations from Medieval to Victorian

Posted: April 21, 2013 in Innovation, Ireland
Tags: , , , , , , ,

Look through a list of former US bankrupts and its reads like a Who’s Who. Implicit in the US business world is an assumption that it is better to have a go and fail than not even try. And more to the point, if you do fail, have another go. In Europe, the stigma of failure is such that it is a wonder that there are any entrepreneurs at all.

Now Ireland has overhauled its bankruptcy rules, and in so doing ensured it no longer lags half a millennium behind the US. It is now merely a couple of centuries behind.

Right now in Ireland, if you go bankrupt, the period of your bankruptcy lasts 12 years. If you go bust, you are condemned to misery for around a quarter of your working life. It isn’t much better than debtor’s prison. Then again, for that very reason, bankruptcy is very unusual in Ireland.

Now insolvency rules are being overhauled. The bankruptcy period is being shortened.

It’s an improvement, but… Under new rules individual debtors will be restricted for a period of up to seven years from spending more than 247 euros a month on food, 57.1 euros on heating, and 125.97 euros on so-called social inclusion – that is a grandiose term for going to the cinema, or to see sporting events.

The thinking behind the rules is in part to protect debtors from being forced by creditors chasing bills to go hungry, or cold.

But these comments from Lorcan O’Connor of the Insolvency Service of Ireland are telling: “There are very few people in Ireland who could claim to be experts in personal insolvency.”

Perhaps the single biggest respect in which the US economy scores over other countries is the way in which it has an innate ability to reinvent itself. Mistakes are not only considered inevitable; in some ways they are seen as a sign of ambition, of big ideas.

Europe, perhaps with Ireland in the vanguard, is still living in a past which sees failure as an anathema, and as a result, risk is suffocated virtually at birth.

©2013 Investment and Business News.

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