Increase in Insolvency Service Fees

Discussion in 'Finance, Property, Law' started by Iolis, Mar 21, 2009.

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  1. Fees are to rise in the near future.

    The Insolvency Proceedings (Fees)(Amendment)Order 2009 together with Explanatory Memorandum laid before Parliament.

    The County Court listings are full of those, who have taken the option of declaring themseves bankrupt.

    If an individual is living in rented accommodation (ie, no house for the court to order a sale of), is driving around in a cheap car that is not worth selling, and has mountains of unsecured debt piled up on credit cards and bankloans, a bankruptcy petition is not difficult to obtain.

    The downside is that unless you are on benefits, or on on low pay, the fees, which will include both the court fees and those of the insolvency service will set you back nearly £500, this includes both the current County Court fee and the current Insolvency Service fee taken together.

    Not recommended if you own your home or are paying a mortgage since your equity of redemption is liquified in favour of your creditors.

    With automatic discharge after 12 months (provided you make full and honest disclosure, and co-operate fully with the Insolvency Service), £500 may be regarded by some as money well spent.

    And Oh, one does not need a solicitor or an expensive practitioner.

    Contrary to popular belief, attending the county court by a lone individual to petition for his own bankruptcy is not the equivalent of climbing Mount Olympus to receive the judgement of Zeus. Neither does it involve being branded with the mark of Cain. It is nothing more than an informal hearing before a district judge alone in his chambers. If he is happy that you have been competently advised, by a body such as the CAB that bankruptcy is your only viable option, he will generally grant the order you seek.

    All the forms and guidance notes one needs are downloadable free from the Court Service Website. Or you might like to have look at the Insolvency Service Website.

    I do come across those who have tried and failed to reach an accommodation with unsympathetic and usurous creditors who are traumatised into ill-health through low-level intimidation by telephone and letter from creditors and see many who are 'ripped off' and driven further into debt by those who offer IVA and other parasitic services.

    Ordinary decent people who have fallen victim to those they have just 'bailed out' would be surprised to learn that as a direct consequence of the reforms to the civil justice system brought about by Lord Wolf, that they can if pointed in the right direction, achieve a positive outcome for themselves without the 'assistance' of the parasitic services who prey upon them.

    Regards and best wishes
     
  2. I agree with the above that Bankruptcy can be a way out of an impossible situation and the accuracy of the above advantages of going bankrupt.

    There are disadvantages too which I think it would be helpful to point out to balance the arguement so that those contemplating bankruptcy consider their position carefully and with full knowledge of its intended and unintended consequences.

    Aside from the moral issues of whether it is right to just "pack in" and go bankrupt consider the following disadvantages:

    Large value assets will be subject to seizure for sale. This could include your family home. Clearly this would not apply in the example given above.

    Any "windfalls" during the period of the bankruptcy such as an inheritance or a lottery win will be available for your creditors. If you have a military pension, the Insolvency Service can "take" this and use it in the future to pay creditors.

    Your bankruptcy will be registered with credit reference agencies and your credit rating will be affected. The net outcome of that is that you will have problems getting loans, credit cards and mortgages for a significant period of time or be paying a much higher interest rate as you will be deemed a higher risk.

    Your bankruptcy may affect your car insurance and other such premiums. I have seen some companies, especially the online comparison sites etc asking if you have been ever bankrupt. I can only assume that they will use this information to deny credit or to potentially increase premiums.

    You will not be able to take credit from anyone or any organisation for any one transaction of more than £500 without disclosing your bankruptcy. So for example if you wanted to buy a fridge freezer, sofa etc on a "buy now pay later" deal or get zero per cent interest etc you must inform them of the bankruptcy before taking advantage of the deal.

    Professionally qualified people will have their practising certificate suspended.

    A bankrupt cannot act as a company director.

    Certain debts arising in matrimonial proceedings, and other debts e.g. student loans, may not be discharged. For example, if you gave your ex wife the matrimonial home and she now owns and lives in it with the kids, the Insolvency Service may wish to unpick that deal and take the house too, leaving your ex wife and kids homeless.

    If the Insolvency Service decides that you have been 'reckless' in accumulating your debt you may be subject to a bankruptcy restriction order.

    I hope that helps.