People with financial worries may be put off seeking advice by an increase in the cost of petitioning for bankruptcy.
The cost of petitioning for bankruptcy has risen to £525 and with court fees the total cost is £700. This is not the first time the charges for petitioning for bankruptcy have risen in recent times, since March last year the cost has risen by 37%.
The Insolvency Service blamed the increase of £75 on rising administration costs.
Experts believe that the increase in these charges will have a negative effect on people who are already faced with having to make tough decisions.
Insolvency practitioner Mark Sands, from RSM Tenon, said “So many people flounder around and do not see a way out. They are going to be put off exploring bankruptcy as a solution.”
The charges made by the Insolvency Service are actually higher as a further £1,715 is charged, although this is taken from the assets recovered as part of the bankruptcy proceedings. However, upfront costs have had to rise as in this charge is never actually paid in half of bankruptcies.
There has been opposition to the increase in charges, Una Farrell from the Consumer Credit Counselling Service said, “It is a very steep rise. We already have to do a lot of work helping our clients to get the money together to pay the fees.”
For people with debts of less than £15,000 and savings of less than £300 a Debt Relief Order (DRO) could be a cheaper option with charges of just £90.However due to the size of their debts for many this is not an option.