People facing financial difficulty are being priced out of bankruptcy because the fees involved are too high, the insolvency industry trade body has warned.
R3 reported on 6 March that 70 per cent of its personal insolvency practitioner (IP) members had seen people who could not afford the official fees involved in a bankruptcy. The court fee is £175 and there is a £525 administration fee payable to the Insolvency Service for what is known as the debtor’s petition.
As a result, many of those affected had taken no other action to tackle their financial difficulties. Only six per cent of IPs said individuals had entered an Individual Voluntary Arrangement, with a total of five per cent saying they had entered either a debt management plan or debt relief order.
Stuart Frith, chair of R3’s personal insolvency committee, said: “It is a matter of some concern that entering bankruptcy has become unaffordable for some.”
He suggested allowing the administration fee to be paid in instalments, saying this would make the process “accessible”, adding: “Regardless of whether an individual got into debt through reckless spending or through no fault of their own, the insolvency regime needs to make all options available according to the circumstances of each case.”
Andrew Skinner, head of Palmers’ Insolvency team, said: “The longer you allow a financial problem to continue, the fewer options you may eventually have to resolve the difficulty. That’s why seeking early professional advice is essential.
“There are a number of formal and informal ways to resolve debt<!–> and insolvency issues. We can advise on all types of individual insolvency situations, to help those affected by debt to make informed decisions and achieve the most positive outcomes from their situation. For more information, please contact our Insolvency team.