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Cost of bankruptcy to rise to £700

Cost of bankruptcy to rise to £700

The Insolvency Service is set to increase bankruptcy petition fees by a further £75 on June 1 2011.

For debtors, the deposit on a bankruptcy petition will increase from £450 to £525. The Court Fee already increased from £150 to £175 at the beginning of April. This means that the total cost at the Court to declare bankruptcy will now be £700 per person.

A spokesperson for the Insolvency Service said: “We accept that the increase in the deposit that must be paid for a bankruptcy petition will not be welcome for those who find themselves in financial difficulty and for whom bankruptcy is the only option.”

James Falla, senior debt expert at Wilmott Turner said that it was difficult to justify the increase.

“At a time when many people are struggling to make ends meet and wages are static or falling, an increase in the cost of the bankruptcy deposit by nearly 17% seems hard to justify. The increase will mean that people who need to take advantage of the bankruptcy solution will have to delay their application while they save to meet this increase” he said.

A DRO is a cheaper alternative to Bankruptcy

Changes will not be made to administration fees in bankruptcy and company cases. There will also be no increase to the secretary of state or fee band charges.

The spokesperson added: “The deposit paid on a petition by a debtor is only a contribution of the cost of administering bankruptcy cases with the balance being provided from the recovery of assets. The overall cost of administering a bankruptcy case has not increased since 2007.”

The Insolvency Service also pointed out that there are alternative insolvency measures to bankruptcy for individuals with little surplus income, few assets and less then £15,000 worth of debt. These include Debt Relief Orders that were introduced on April 6 2009.

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