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23/02/2016

R3 welcomes 7% reduction in cost of entering bankruptcy

  • However, changes could go further
The Insolvency Service has announced that the government fees for an individual applying to be made bankrupt are to fall from £705 to £655 in April 2016. Stuart Frith, chairman of the Personal Insolvency Committee of insolvency trade body R3, says:
 
“The fall in the cost of bankruptcy petitions is good news. The government fees for entering bankruptcy can be a real obstacle to people trying to deal with problem debt and lower fees mean a lower barrier to debt relief.
 
“While it’s a step in the right direction that fees will be able to be paid in instalments, R3 would much rather see the fees paid over the course of the bankruptcy rather than up-front. People should have to wait to exit bankruptcy until the fees are paid in full rather than wait to enter it.It would be better for everyone if people with unsustainable debts could access the protections offered by bankruptcy when they need it, not when they can afford it. £655 is a sizeable sum for someone to have to find whether they have debt problems or not.
 
“The sooner insolvent individuals enter an insolvency procedure, the sooner they can rebuild their finances and the sooner creditors can start to be paid back.”
 
The government fees are made up of a £525 deposit and a £180 application fee. The application fee is falling to £130 in April as part of the switch from debtor petitioned bankruptcy orders being made by the courts to an online adjudicator system. Creditors must still petition the court should they wish a bankruptcy order to be made against a debtor.
 
A debtor must now owe at least £5,000 to a creditor before that creditor can petition for their bankruptcy (prior to October 2015, only £750 had to be owed; R3 had called for an increase in this threshold).  

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.