The Insolvency Service has announced that the rules surrounding online bankruptcy petitions will be changing. In the future, if you decide to petition your own bankruptcy online, you won’t need your petition to be signed off by a licensed Insolvency Practitioner (IP), which is the case at present.
‘The idea is to make the process of declaring bankruptcy simpler for the debtor,’ explains Andy Gorton, head of bankruptcy advice service, Bankruptcy Clinic. ‘The changes tie in with the government’s lean towards giving people more control over making their own decisions and handling their affairs themselves. Removing the need to involve an IP in every bankruptcy petition will speed up the process and make it less daunting. In turn, this will help relieve some of the pressure and stress that the debtor is likely to be feeling.’
Other changes to the bankruptcy process, brought about by the implementation of the Enterprise & Regulatory Reform Act 2013, will also see far fewer bankruptcies being heard in court. Instead, the Insolvency Service will take on the court’s role of adjudicating in bankruptcy cases and making Bankruptcy Orders.
Speaking to an ICAEW conference, the Insolvency Service’s Sarah Albion described the new process to delegates. ‘They (the debtors) will complete an online application and submit their application to the newly created office of the adjudicator, rather than to the court. As a result of the changes, the court will only be involved in a minority of cases…involving an appeal or a post-order application. In this way, much valuable court time will be freed up.’
As with removing IPs from the equation, these changes are likely to make bankruptcy a simpler and more accessible solution as well as removing (for most people) the worry of having to appear in court. At the same conference, Ms Albion added that the Insolvency Service will also be upgrading the online application process for Debt Relief Orders (DROs), an alternative to bankruptcy that may be open to people with little or no income and assets.
Says Andy: ‘At the moment, DROs are under-used because the eligibility criteria are so strict. For example, your disposable income must be £50 or less a month, you can’t own any assets worth over £300 (except a car which can be worth up to £1,000) and your total debts mustn’t exceed £15,000. It’s the latter figure that tends to exclude people from accessing a DRO, as people with severe debt problems often owe more than this.’
‘However, the threshold is set to increase to £20,000 in October 2015 and this change, combined with the online application upgrade, should make DROs a more attractive and accessible option in the future. This would be great to see because for people who qualify, a DRO is much cheaper than declaring bankruptcy whilst offering some of the same benefits.’
These benefits include the likelihood of your debts being written off just 12 months after your DRO or Bankruptcy Order is made, unless your circumstances improve significantly during this time. However, both solutions have drawbacks as well as benefits, which is why it’s so important to seek expert advice before deciding how to deal with your debts.
Need debt help? Ask Bankruptcy Clinic
The expert team at Bankruptcy Clinic are ready and waiting to help you find the right solution to your individual debt problems. As our name suggests, we specialise in giving you access to professional bankruptcy advice, but we can also arrange other personal insolvency solutions including DROs and Individual Voluntary Arrangements (Protected Trust Deeds if you live in Scotland).
We can also help with debt solutions that don’t involve insolvency, such as informal Debt Management Plans and Scottish Debt Arrangement Schemes. All these different choices might seem confusing at first, but with our help, you’ll have all the information you need to make the right decisions. And of course, we’ll always be open and honest about any fees that apply to your chosen solution.
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The sooner you get in touch, we sooner can help you start getting your life back on track.