R3 cautiously welcomes advent of simpler bankruptcy regime

INSOLVENCY trade body R3 has welcomed a change in the law – that kicks in today (6 April) – which means applications by insolvent individuals to enter bankruptcy can be made online rather than by petitioning the court.

Applications will now be assessed by a government adjudicator rather than a judge.

The change will lead to a fall in the up-front cost of entering bankruptcy. In total, it will now cost those applying online £655 to enter bankruptcy (down from £705). The £655 comprises a £130 application fee and a £525 government deposit.

Fees can also now be paid in instalments, but the applicant may only enter bankruptcy once all of the £655 has been paid.

Phillip Sykes, R3 president, says: “The fall in the cost of entering bankruptcy and the introduction of online applications is good news. Both changes will make bankruptcy much more accessible to those who need it, although the government will need to keep a close eye on the new system to ensure fraudulent applications are spotted and that the new system works as well as the court-based system it replaces.”

“The easier it is for an individual to enter an insolvency procedure that is appropriate to their situation, the easier it is for them to pay back what they can and to get back on their own two feet again. It’s better for the individual, their creditors, and the rest of society.”

“Obstacles still remain to people entering bankruptcy, however. The application fee and deposit should be paid in full before an individual can leave bankruptcy, not before they can enter it. Up-front fees mean bankruptcy is accessible to only those that can afford it, not all those who would benefit from entering it.”

“It is hard enough for most people to find £655 when they’re solvent, let alone when they’re facing bankruptcy.”

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