Rather than waiting for a creditor to enforce bankruptcy against them, an individual who is in debt and owes more than they own, can apply for a Bankruptcy Order to be made against them by filing their own bankruptcy petition in Court.
However, the fee to do so is currently £705. People on low incomes or in receipt of certain benefits can be exempted from paying the Court fee of £180, but the balance of £525 due to the Official Receiver must still be paid.
As you can imagine, people who are in debt will rarely be able to afford this fee and this cost can sometimes mean that a person literally cannot afford to ‘go bankrupt’.
A recent ‘think tank’ report by the Centre for Social Justice has found that 300,000 people in Britain cannot afford to enter bankruptcy.
We have heard that some Insolvency Practitioners will charge a fee to help people fill in the paperwork required to go bankrupt. At Kirks, that is not the case. Our initial meeting is always free and we can give any help needed to fill in the simple paperwork at that meeting, as we do not like to charge people for this service.
Bankruptcy used to have quite a social stigma attached to it that has all but disappeared in recent years. It’s not a nice thing to have to do, but it can be a very good way of creating a clean start and clearing off your debts. You just have to make sure that it is the right thing to do in your circumstances before you do it. It may not be if you own a house, for example.
We always recommend that people take advice first to ensure that bankruptcy is the best option available to them as there are sometimes better and cheaper alternatives open to the individual depending on their circumstances.
To discuss bankruptcy further and to find out how we can help, contact us today.