If you have been searching around for the cost of bankruptcy, you may be struggling to find a straight answer. Some people may think that going bankrupt is free but sadly that is not the case, which tends to put a lot of people off. All forms of bankruptcy require a fee of some sort and can vary depending on where you live. You have to pay a court fee and a fee to the official receiver and maybe a solicitor’s fee.
To make it simple, bankruptcy fees are typically around £650 to £700. If you are on low income or receiving benefits then the court fee may be waived which can reduce the bankruptcy fee down to around the £525 mark.
To break down the bankruptcy fees, the Official receiver receives £525 and the court fee costs £175 in England and Wales and £115 in Northern Ireland. A solicitors fee of £7 is also required if you live in Northern Ireland. Please note that some courts may charge slightly more or less than the quoted figures above.
breakdown of bankruptcy fees in Northern Ireland
How Can I Pay The Fees?
It can be tough to come up with the Bankruptcy fees, especially when considering those looking to go bankrupt are unlikely to have £700 lying around in their back pocket. The harsh reality is that is down to the individual to find the money either by saving up or by borrowing the money from a family member or friend to pay the bankruptcy fees. If you are really struggling to pay the full bankruptcy fee then you can apply for a court fee remission by submitting an EX160A court form so long as you are on one of the following income or benefits support:
• Income support
• Job Seekers Allowance (JSA)
• Working Tax Credit
• Pension Credit guarantee credit
• Income related Employment and Support Allowance (ESA)
The court fee remission will help waive the court fee reducing your overall bankruptcy cost down to just the official receiver and solicitor fees.
Help Completing Your Bankruptcy Application
If you aren’t confident about completing you own bankruptcy application then there are companies out there which offer a complete bankruptcy service from offering the initial bankruptcy advice to filling in and completing your bankruptcy application forms on your behalf. The forms required to go bankrupt include the 3-page debtors petition and a 30-page statement of affairs. These forms are fairly comprehensive and will need to be completed to a high standard as they are sent to the bankruptcy clerk, official receiver and judge. A good bankruptcy company will ensure all your information is filled in correctly and submit the paperwork to your local court on your behalf. These companies will charge an additional fee for their work, which can add a few hundred pounds on top of the bankruptcy fee, quoted above.
Should you feel confident in completing the bankruptcy application yourself, you can either go to your local citizens advice bureau where a member of staff will give you some bankruptcy advice and provide you with all the forms necessary to complete your bankruptcy application. Alternatively, you can download the forms from the gov.uk site at https://www.gov.uk/bankruptcy/applying-for-bankruptcy
The fees mentioned above are not the only payments you must take into consideration. Once you have petitioned bankruptcy, your Official Receiver will asses your circumstance and decide whether you will have to make any further payments over the next 3 years. Your income and expenditure will be evaluated and if you have any disposable income (surplus cash) then you will be asked to pay that into your bankruptcy over the next 3 years. This means that if you demonstrate that all your income is not required to pay for essential outgoings then you are likely to be asked to make a payment called an Income Payment Agreement (IPA).
Debt Relief Orders
Since 2009 there has been a new bankruptcy solution know as a Debt Relief Order (DRO), which is a cheaper and simpler route to bankruptcy. The qualifying criteria for a DRO is a lot stricter and can only be considered if you have:
• unsecured debts under £15,000
• no mortage
• no assets exceeding £300
• a disposable income under £50
The good news is that DRO is a lot cheaper than bankruptcy by costing £90 which can also be paid in instalments. It is a great low cost alternative to bankruptcy, provided you qualify for the solution. If you want to find out if you qualify for a DRO then you can visit the Stepchange website for some free advice.