CCR Magazine

In response to the Insolvency Service's decision to raise the cost of bankruptcy by £90, Peter Sargent, President of R3, the insolvency trade body, said: “Save up to go bust? With the Insolvency Service raising bankruptcy costs by £90 the price of going bust has never been so high, standing at £600 all in, including court fees.

"However, when the cost of bankruptcy is seen in context of the average bankrupt’s unsecured debts, this is still ‘value for money’ for the debtor. £600 is just 2% of the average amount of unsecured debt which stands at £33,000. In fact it actually costs the Insolvency Service £1,715 to administer and investigate a bankruptcy, recoverable on asset realisations, although sometimes this won’t get paid.

"The higher charge has been introduced to ensure that bankruptcy costs don’t come out of the public purse and fund the Insolvency Service, which has never seen such a high demand for its ‘unwanted’ services.

"To cover the £600 fee we have seen cases of family and friends pitching in and in other instances, we have seen cases where employers will lend the money to be paid back on future earnings.

"There is better news for those who can't afford bankruptcy and have debts of less than £15,000, as it is proposed to allow them access to the Debt Relief Order process, costing less than £100, even if they have a small pension.

"For those with larger debts, it does cost money to go bankrupt but that could be money well spent, providing peace of mind and marking a line in the sand."