On 21st July 2016 bankruptcy fees were increased. This had been announced a few weeks earlier by the Insolvency Service, see changes to the bankruptcy fees.
The important change for people who are going to go bankrupt themselves (in legal jargon “petition for their own bankruptcy”) is that the bankruptcy deposit fee is now £550, an increase of £25. This is in addition to the current Adjudicator’s fee of £130, so the total cost of going bankrupt is £680.
You don’t need to worry about the other fees listed in the above link, they aren’t payable by the person going bankrupt.
Bankruptcy fees too high
The Insolvency Service says “Based on our research we do not expect there to be any significant changes to the number of insolvencies due to the introduction of the new fee structure.” So if they are right, does an extra bit on the fees matter, if it isn’t going to stop people going bankrupt?
£25 extra is important because the bankruptcy fees were already too high. It makes no sense to charge people whose finances are in the worst possible state hundreds of pounds to go bankrupt. “Illogical” as Mr Spock would say.
As a result there are too many people who are already excluded from the “clean start” that bankruptcy offers because they cannot afford the fees. That is not a mark of a civilised society. Bankruptcy is not supposed to be a great solution for the well-off who have accumulated too much debt, but not be accessible to people on low incomes.
If you go bankrupt and you have money saved up, then those savings become the property of the Official Receiver. If you are have surplus income each month, then you will be making payments for three years to your bankruptcy. So the people that can afford to pay, are already doing just that.
But what about the majority of people going bankrupt who have little or no spare income each month. How are they supposed to save up £680? To point out the obvious, if you have less than £50 a month spare income, it will take over a year to save up the bankruptcy fees. A year in which your other debts are probably increasing, including priority debts, which can be very stressful.
There are other ways, as I list in my Help with the bankruptcy fees article. But for too many people this is a hard, stressful and slow process. £25 extra makes it that bit worse.
Least well off were hit hard by new Adjudicator Fee in April
This increase is especially disappointing coming less than three months after the old court fee of £180 was replaced by the new Adjudicator fee of £130. That was a welcome £50 lower… except for people on a low income who were previously able to get remission from paying the court fee. There is no provision for any fee remission for the Adjudicator fee.
So the bankruptcy fee for the least well-off was £525 before April. Then it went up to £655. And now its £680. All in it together? I don’t think so.