Are you considering going bankrupt in the UK? One of the most important questions you might have is what does bankruptcy cost? This article gives you all the information you need to know about the cost of bankruptcy in England and Wales. You will also find suggestions and advice for different ways you can get the money together.
This information given here relates to the cost of bankruptcy in England and Wales. If you live in Scotland or Northern Ireland, the costs are different.
How much does bankruptcy cost?
The total cost of going bankrupt in England and Wales is currently £680. This amount includes an application fee of £130 and bankruptcy deposit of £550.
Unfortunately, the fee can’t be reduced in any circumstance. There are no exceptions or exemptions. Everyone has to pay the same amount regardless of their circumstances or level of income.
You may have read that it is possible to pay your fee in installments. This is correct. Nevertheless, you can’t actually submit your application and get the protection of being bankrupt until the total amount is paid.
If your bankruptcy application is rejected (perhaps because you don’t qualify), then you will receive a refund of just your deposit. In other words you will get back £550 but not the full £680.
Can you borrow from a credit card or bank overdraft to cover the cost of bankruptcy?
Now you know the answer to what does bankruptcy cost, you might be wondering how to raise the fund to pay the fee. Clearly, one option you have is simply save the money you need to pay your bankruptcy fee. However, you have available credit, you could speed up the process by using a credit card or your bank overdraft to cover the cost.
The Official Receiver is unlikely to treat you any differently if they become aware that you have borrowed more to help you go bankrupt. There are a couple of good reasons for this.
Firstly, the extra you have borrowed is likely to be relatively small compared with your overall debt. Secondly, you have used the money specifically to resolve your debt problem and stop it becoming worse.
There is nothing to stop you borrowing the money you need to pay for your bankruptcy from a family member or friend.
Sell your car to afford the cost of bankruptcy
You are allowed to sell your car (or anything else you own) to fund the cost of your bankruptcy.
Selling your car to raise funds might actually be a good idea if its market value is more than £1500. This is because, after you go bankrupt, the Official Receiver (OR) might tell you to sell it and get a cheaper one anyway.
You can sell your vehicle to anyone you like. However, it is critical you get market value. This is because if you sell at below value, the OR can demand the vehicle is returned and sold for a more realistic amount.
Once your car is sold, you can use up to £1500 to buy a replacement. The remainder of the money raised can be used to pay your bankruptcy fee.
An on-line valuation from someone like We Buy Any Car.com is a perfectly acceptable way to establish the value of your vehicle.
Get a grant to pay your bankruptcy fee
Normally you will have no option other than to pay the cost to go bankrupt yourself. However, there are some very limited circumstances where you might be able to get a grant to assist you with the fee. Understanding what does bankruptcy cost and the available options for grants and support with the finanical aspects can help you make informed decisions about your financial future.
Utility Trusts
Some utility companies fund charitable trust funds designed to assist people suffering with financial hardship.
If you are currently a customer of one of these organizations, they might be able to help. You can get in contact with them directly via their websites:
Royal British Legion
If you are retired from the armed forces you may be able to get a bankruptcy grant from the Royal British Legion.
For more information about this and to apply, visit their website: Royal British Legion Grants
Further information about grants and benefits that might be open to you which could assist you with the cost of bankruptcy can be found on the Turn 2 Us web site.
Debt Relief Order – Does this cost less that bankruptcy?
Understanding what does bankruptcy cost and how to pay it is the first most important factor. You now may be struggling to raise the required funds. If you are struggling to get the required money together to pay for bankruptcy, an alternative you may be able to consider is a Debt Relief Order (DRO).
A DRO will give you a very similar outcome to bankruptcy. Your debts will be written off after just 1 year and you don’t have to make further payments towards them. In addition, a significant advantage of this solution is that it costs just £90 to implement.
However, not everyone can apply. To qualify you have to meet some strict qualification criteria:
- Your total debt must be less than £30,000
- You can’t be a home owner
- Your surplus income must be less than £75/mth
- If you own a car it must be worth less than £2,000
- Any other assets you own must not be valued at more than £2000
If you think you qualify for a DRO you can apply with the help of an approved intermediary. Some of the main ones you can try are listed below:
- Angel Advance – Tel: 0800 210 0638
- PayPlan – Tel: 0800 280 2816
- Your local Citizens Advice Bureau (CAB) advisor
Are you wondering about the financial implications of filling for Bankruptcy? You might be asking yourself, “what does bankruptcy cost?”. Got a question about the cost of bankruptcy? Get in touch with Bankruptcy Guide today.
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November 29, 2023
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October 9, 2023
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Assistance with going Bankrupt
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