Good news: by proposing to take the court bit out of consumer led bankruptcy procedures we are now a step closer to making it easier for overstretched consumers to go bankrupt.

I welcome the proposed removal of the court process as  I feel it is an unnecessary requirement, reducing  the stress and financial demands faced by already overstretched consumers, and the time spent, especially of those living a considerable distance from the courts, some of which will only allow bankruptcy petitions by appointment and on certain days of the week.

The consultation, in which I took part, also considered the removal of the court process for creditor led petitions, but there was understandable resistance to this as it would not be as straightforward as in consumer led cases.

The cost to administer a consumer’s bankruptcy v the fee

Since this coalition has been in power they have increased the cost to go bankrupt by 40% and for many consumers the bankruptcy fee is outside their reach, currently standing at £525 for the Official Receiver’s fee with a £175 Court fee, total £700, whereas in Scotland the total cost is just £200.

It costs The Insolvency Service £1,725 to administer a straightforward consumer bankruptcy case and I know from my previous correspondence with the PM on this issue that he does not see the tax payer having to help out.

Advertising the name & address in the local newspaper

Three years ago The Insolvency Service removed the requirement to advertise a bankrupt’s name, address and occupation in the local newspaper, unless the individual is uncooperative and it is necessary to gather information for the Official Receiver (OR) from the public.

However it is important to note that this move was not undertaken to relieve fears of consumers should their neighbours find out about their situation, but merely to help reduce the cost of administering the bankruptcy through a reduction in the advertising costs!

Barriers to going bankrupt

My clients tell me that the need to attend court and the then requirement to advertise the name, address and occupation in the local newspaper were two of the biggest barriers that put off consumers from going bankrupt, so it is great news to now see both being removed.

So are we to see an increase in the number petitioning? I don’t think so, not until we see real help in reducing the fee, that’s the real big barrier affecting thousands.

Free Bankruptcy Support from the DebtWizard

If bankruptcy is for you then why pay a firm between £500 and £1,000 for them to help filling out the bankruptcy forms? We show you how to do it for free, what to expect at court and what to say to your creditors, plus lots more!

Our 'bankruptcy support' section will help guide you through the process, we cover

1. The consumer bankruptcy forms and their key points
2. Finding the bankruptcy fee / Do I have to pay Court fee of £175?
3. Getting the timing right & a new bank account
4. Finding the right court
5. What to wear and what happens at court
6. The Official Receiver’s (OR’s) interview
7. Income Payment Agreements (IPAs)
8. Post bankruptcy, your creditors
9. Will my name be in the local paper?
10. Bankruptcy /debt jargon

Take me to the Bankruptcy Support Guide

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