Jim. Great advice again.If the bank is patient, they could seize some of your pension. Banks are now very alive to the value of pensions. Public Sector workers can be particularly exposed as they cannot control the payment of the lump sum gratuity payment which they receive.
Pensions and bankruptcy comprise a very complex interface of pension legislation, bankruptcy acts and tax legislation, and a professional advisor would need to see all of the pension policy documentation to properly advise.
There are a number of reasons why we might advise a client to go bankrupt. Protecting a pension pot is one of them. You will note from my comments below that your pension is effectively at risk if you are ever within a 5 year window of being able to draw it down.
The Personal Insolvency Act 2012 introduced two new provisions into the 1988 bankruptcy Act relating to pensions on bankruptcy. Section 44A (subject to the paragraph below) of the Bankruptcy Act now provides that assets under a relevant pension arrangement (other than payments already received or which the bankrupt was entitled to receive) shall not vest in the Official Assignee. A relevant pension arrangement is defined in the section and includes a retirement benefits scheme, retirement annuity contract, PRSA, overseas pension plan etc.
Section 44A goes on to provide that if the bankrupt is entitled to perform an act or exercise an option under the relevant pension arrangement which will result in the bankrupt receiving any amount of money (i.e. a pension or lump sum), that amount of money shall vest in the Official Assignee. In addition, the Official Assignee will be entitled to perform that act or exercise that option on behalf of the bankrupt. This will apply to acts which can be performed or options which are exercisable by the bankrupt prior to or at the time of the bankruptcy or at any stage within 5 years of the bankrupt being adjudicated bankrupt.
The Court also has the power to make Bankruptcy Payment Orders directing any person from whom the bankrupt is entitled to receive any pension to pay the pension directly to the Official Assignee or trustee. However, reasonable provision must be made for Reasonable Living Expenses. In addition, a spouse may be able to make a claim for a beneficial interest in a pension fund.
In conclusion, you should really try and reach a settlement with the bank now for the residual debt.
Jim Stafford
THEY CANNOT MAKE ME, CAN THEY ? QUOTE]
There is a possibility of a judgement holder progressing a JM over a property to a Well Charging Order and Order for Sale. However, this process is expensive and time consuming and given that the property in question is a family home there is a low possibility of a Court granting an Order for Sale over the property in the current legal climate.
On a public forum such as this I cannot comment about policies of individual banks. However, I can make the general observation that Irish based banks are more patient than foreign banks who are exiting the market place, and also more patient than funds which have purchased debt.
I would not write off your 3 co-investors yet. They might inherit money etc, and contribute to the residual debt.
You need a professional to carefully review the pension docs to see what the pension position is. Essentially, if you are within 5 years of being able to draw down your pension, then the Official Assignee could step into your shoes and seek the 25% lump sum.
You may need to examine if your spouse could make a claim for a 50% beneficial interest in your pension fund.
In respect of the family home, it is practically impossible to enforce a judgment mortgage which is against just one joint owner. The judgment mortgage lasts 12 years from date of judgment. However, any bank could effectively realise your equity in the family home by making you bankrupt.
Jim Stafford
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