For many people bankruptcy can be a very good way of dealing with a personal debt problem. However one of the main issues with bankruptcy is the up front fee that you have to pay at the court.

Clearly if you are in a position where you are considering going bankrupt you are likely to have very little money available, let alone enough to pay the court fee. We consider the options you can consider for getting the money together  to pay this fee.

Is it possible to save the Bankruptcy Fee

Many people choose to borrow the money required from friends or family. However, if this is not possible, you may simply have to save the money. The way to do this is to stop making payments to your unsecured creditors. The money that you save can then be put towards your court fee.

Of course, as soon as you stop making payments to your creditors they will start collection procedures against you.

It is advisable to make token payments to your creditors as this will show your intent in dealing with your debt problem. It may also reduce the amount of threatening letters and phone calls that you receive.

Should you tell your creditors you intend to go bankrupt?

If you are renting your property, it may be helpful to inform your creditors that you are planning to declare yourself bankrupt as this might help reduce their collection activities.

However, if you are a home owner, my advice would be not to tell your creditors about your plans. This is because if they have not already done so, you creditors may attempt to apply for a charging order against your property which would secure their debt.

When you then subsequently declare yourself bankrupt, this debt will not be written off but will remain payable until your house is eventually sold.

The Debt Relief Order alternative

If you are on a low income or receive certain benefits you may be eligible for a reduction of the Bankruptcy fee. However in this situation you should also consider an alternative solution called a Debt Relief Order (DRO).

A DRO works in very much the same way as bankruptcy. However the cost is far lower and you will not be asked to make any payments towards your debts. Unfortunately this solution will not work for everyone. There are strict criteria you have to meet to be eligible to use one.