The 6th April 2016 heralded a significant change in the process an insolvent individual undertakes to make themselves bankrupt. Previously, if a debtor was insolvent and wished to declare themselves bankrupt they had to make an application to their local County Court which held an insolvency jurisdiction. This is no longer the case, making yourself bankrupt is now no longer a Court procedure.
A self-petition or debtor’s petition is now an online procedure and the fees have consequently been reduced to £655.00. In addition this can now also be paid in instalments; previously, in addition to the Official Receiver’s deposit there was a Court fee which meant that a debtor would have to pay £705.00 on the day of their bankruptcy hearing at Court.
The debtor now has to complete an online application outside of the Court arena. When the fee has been paid full the application will be placed in front of an Adjudicator from the Insolvency Service.
The Adjudicator can then:
- Agree the individual’s application, the consequence of which the debtor is made bankrupt
- Request further information from the individual
If the Adjudicator agrees with the application the Official Receiver is notified and the petitioning debtor is sent a copy of the Bankruptcy Order.
Why has a new procedure been introduced?
For some time now the Courts have been inundated with straightforward debtor’s petition bankruptcy applications. The new procedure will hopefully streamline things and will mean a Bankruptcy Order is more easily obtained by an insolvent debtor.
Hopefully, this will mean more insolvent debtors who need bankruptcy will make themselves bankrupt as they don’t have to face the daunting prospect of a Court hearing. In addition, the Court timetable will be freed up to allow Judge’s to deal with other applications and hearings.
What impact will this have?
Obviously any new procedure with a significant change to the way that things were previously done would take time to bed in and no doubt there will be teething problems. Most notably the worry of fraudulent petitioning by a person other than the insolvent debtor will have to be addressed and assessed. On the face of it, it is now much easier for a debtor to make themselves bankrupt through the online procedure but no doubt this will be being monitored by the Insolvency Service and any concerns will be addressed quite early on.
Having assisted dozens of insolvent individuals to petition for their own Bankruptcy I think the change is a step in the right direction. Many times I have seen debtors who have needed Bankruptcy not petition due to a fear of the Court process and also the higher fees that were needed to be paid in one lump sum on the day of the hearing.
I anticipate that the new online procedure will mean many more debtor’s petitions, allowing the individual concerned to make a “fresh start” as the Bankruptcy regime initially intended when the last significant change was made with the Enterprise Act 2004. There will now be no courtroom phobia and the fees are less and can be paid by instalments. The writer will certainly be monitoring the new process very carefully and looking for feedback from participants whenever possible.
If you think Bankruptcy might be the best option for you as a debtor I am more than happy to give free independent and impartial advice, please click here to get in touch.