How Much Does It Cost to Go Bankrupt?

When you’re overburdened with debt, personal bankruptcy offers you a fresh start and means you don’t have to repay everything you owe. However, it’s important to bear in mind that declaring yourself bankrupt isn’t free, even though you’re struggling financially.

Indeed, ‘how much does it cost to go bankrupt?’ is one of the most common questions our licensed insolvency practitioners are asked when providing bankruptcy advice for Birmingham bankruptcy clients (we’re just a short drive from the city centre), as well as other clients around the UK. Applying for a bankruptcy order from the Insolvency Service is a life-changing step and might not be the best course of action for you, which is why specialist guidance from our experts, who are qualified to manage bankruptcies, can be invaluable.

If you’re wondering ‘how much do you pay to go bankrupt?’ or whether a minimum amount of debt is required, for instance, read on for the key facts about bankruptcy fees and related subjects. Alternatively, call Irwin Insolvency now on 0800 254 5122 for bankruptcy advice tailored to your needs, starting with a free, no-obligation consultation.

How Much Debt Does It Take to Go Bankrupt in UK?

It’s often the case that when people ask us ‘how much to go bankrupt?’, they want to know not only what the process would cost but also how much debt they need to be in before they can submit a personal bankruptcy application to the Insolvency Service.

Going bankrupt is a drastic move, not least because valuable assets are sold to settle debts, so you might assume you’d need to exceed a particular debt threshold before your application could be considered. That’s certainly the impression some people are under when they first contact us about bankruptcy in Birmingham or another part of the UK.

But in fact personal bankruptcy has no minimum – or maximum – level of debt. When people inquire ‘how much to go bankrupt?’, with regards to the amount of debt required, they’re relieved when we tell them they can make an application regardless of the total sum they owe. In a nutshell, you just need to satisfy the Insolvency Service that your personal financial position makes your debts, whether they’re relatively large or small, unmanageable.

It’s worth pointing out that when someone asks ‘how much to go bankrupt voluntarily?’ the situation is entirely different to creditors trying to force debtors into bankruptcy. That’s because a creditor must be owed at least £5,000 (or a share of that amount of debt) to present a bankruptcy petition at court. When we answer the question ‘how much does it cost to go bankrupt?’ later, we’ll discuss why bankruptcy costs are different for creditors too.

What Are the Criteria for Going Bankrupt?

In the UK, bankruptcy is only available to individuals, not companies, and they must be insolvent (i.e. unable to pay debts on time and in full and therefore in urgent need of a debt solution). So questions such as ‘how much do you pay to go bankrupt?’ are only relevant to people concerned about their personal financial affairs, not company insolvency issues.

Personal bankruptcy may result in you losing your home (if you have equity in it) and vehicle, so you should explore bankruptcy alternatives with an insolvency expert before declaring yourself bankrupt. You need to be certain that seeking a bankruptcy order is your only viable option.

You must also have debts that can legally be included in bankruptcy proceedings (e.g. credit card debt, payday loans and overdrafts). Some debts, especially those that can’t be fixed or easily estimated, must be dealt with outside bankruptcy proceedings; examples include fines and personal injury compensation.

To be certain whether you’re eligible for personal bankruptcy or not, why not request bankruptcy advice from our Birmingham bankruptcy experts?

Do You Have to Pay Money to Go Bankrupt?

It’s important to be aware that you can’t submit a personal bankruptcy application without paying bankruptcy fees.

When someone asks ‘how much do you pay to go bankrupt?’ they’re really asking ‘how much do you pay the Insolvency Service to go bankrupt?’ The government agency is tasked with processing and accepting/rejecting applications. You need to pay the Insolvency Service adjudicator’s fee (which covers reviewing and making a decision about your application) and official receiver’s fee (which relates to setting up bankruptcy proceedings).

The only situation in which an individual doesn’t pay to go bankrupt is when a creditor petitions the court. In that case, the creditor must pay the bankruptcy fees, namely the petition deposit and court fee. The fees are different because it’s a different, court-led process.

How Much Does Going Bankrupt Cost?

Having discussed what the fees are for, we’ll now address the key question how much does it cost to go bankruptcies in UK. The adjudicator’s fee is £130 and official receiver’s fee is £550, so the answer is £680 in total. You pay either by credit/debit card online when you submit your application or in cash at a bank.

But what if you have a particularly large or small amount of debt – how much do you pay to go bankrupt then? The answer is the same: everyone applying for bankruptcy pays £680.

If you can’t afford to pay the full amount in one go, you can pay online in instalments of £5 or more, but won’t be able to submit your application until the last one is paid. Alternatively, someone you trust may agree to pay or you may be eligible for a grant from a charitable fund.

Bankruptcy fees are much higher for creditors: they pay £1,500 for the petition deposit and £332 for the court fee (i.e. £1,832 in total).

Expert Advice about Bankruptcy in Birmingham and UK

If you’re considering bankruptcy in Birmingham or elsewhere in the UK, our fully qualified, experienced and compassionate insolvency practitioners are ready to assist you.

For over 25 years, we’ve been helping clients to answer fundamental questions such as ‘how much does it cost to go bankrupt voluntarily?’ and resolve insolvency issues. Our personal bankruptcy advice can help you to make the right decision about your financial future.

Looking for reliable UK bankruptcy advice? Contact Irwin Insolvency in Birmingham today for your free, no-obligation initial consultation.