Bankruptcy just got a lot more expensive for all concerned
With effect from 21 July 2016 anyone petitioning for their own bankruptcy now has to pay £680 (£550 deposit and £130 Adjudicator’s fee).
Further, the Secretary of State fee in bankruptcies has been replaced with a new fixed fee of £6,000 called the “Official Receiver’s General Fee”. The Official Receiver will also charge 15% of realisations as well as other disbursements. Add to this the cost of petitioning and bankruptcy seems to be a less attractive option for creditors when seeking recovery of debts.
The Insolvency Service has also changed its policy, they will process more bankruptcy cases internally rather than allowing them to be dealt with by independent insolvency specialists. The main incentive appears to be to generate an extra £8m pa more income for the Government to fund the core activities of its official receiver offices.
Apart from being more costly for creditors and debtors, a further knock-on effect is to substantially reduce the amount of bankruptcy work performed by independent specialist insolvency practitioners. Andrew Tate, R3 president said: “The government’s new insolvency fees are a very bad deal for the UK’s creditors.”
Whether or not Official Receivers can do a better job in administering bankruptcy cases than independent insolvency practitioners remains to be seen!