After the cost of bankruptcy fees rose by 17 per cent this year, Brits have been left wondering whether filing for bankruptcy is still an affordable option.
The hike in deposit fees means that individuals or creditors must produce a substantially larger sum of money in order to secure a court order, and comes as a further reminder of the nation’s continuing debt troubles. Insolvency expert Melanie Giles explained: “Bankruptcy is becoming an option that is no longer there for those who may need it the most. “Individuals, who may be in debt through no fault of their own, perhaps through divorce, loss of employment or illness, may be being denied bankruptcy because they simply can't afford the application and Court costs.”The deposit that must be paid in order for an individual to be declared bankrupt has risen sharply from £450 to £525. In cases where a creditor is petitioning for the bankruptcy of an individual owing them money, the cost has also risen by 17 per cent, from £600 to £700.The costs would need to be paid to an official receiver, who is a civil servant in the Insolvency Service and an officer of the court. The deposit, a down-payment on management fees payable once a court order is obtained, is paid to an official receiver before they receive the rest of the actual management fees for handling the bankruptcy. Personal debt expert James Falla told Beat My Debt: "If you are already struggling to pay your bills, then trying to get together the £700 required by the bankruptcy court can be a real problem."Rumours have been circulating about the basis for the rise in deposit prices. Melanie Giles suggests that the reason is due to the government’s deficit reducing drive. “The main reason that the cost of declaring bankruptcy has gone up is because the Insolvency Service needs to bolster its own finances as a result of government public sector cuts,” she explained. There have also been suggestions that another reason for the deposit rise is due to the fact that official receivers have found it increasingly difficult in recent months to collect fees owed for handling bankruptcies. Whilst those with assets have traditionally been more secure, the sliding value of assets caused by the uncertain economy has resulted in increasing bad debts. The increase in deposit fees being charged has given rise to valuable questions about how to ensure that bankruptcy remains a viable option for individuals. Perhaps, ultimately, what the industry needs is a government initiative designed to help provide funding for those without the means to pay.Apprentice star's secret debts revealed
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