The Government’s Insolvency Service has announced that the fees for an individual to go bankrupt will fall from £705 to £655 in April 2016.
The current fee is made up of two parts: a deposit of £525 and an application fee of £180. The reduction is part of the modernisation of the personal insolvency regime, which will see all bankruptcy applications by debtors being made online. Previously, all bankruptcy petitions were heard in Court, but from April only creditors’ petitions will be dealt with by the courts. As a result, the application fee will be reduced from £180 to £130 to reflect the reduced cost of dealing with the application.
It is a strange fact that a person must find £705 (or £655 from April) to go bankrupt, at a time when they are in severe financial problems. Over the years, there have been calls for the fee to be abolished completely to ensure that the relatively high cost involved does not prevent those in need from declaring themselves bankrupt. However, successive governments have held onto the principle that the Insolvency Service (which operates the network of Official Receivers in England and Wales and deals with various different aspects of the insolvency regime) should be self-sufficient and therefore has to raise sufficient income to cover its operating costs.
So whilst the procedure for declaring yourself bankrupt may be changing, the fee will only be reducing slightly – 7% or thereabouts.