How much does it cost to go bankrupt?

Bankruptcy is an extreme measure to free yourself from debts. Yet, it’s not free and if you want to go bankrupt, you will have to go to the court and start a legal proceeding. It requires to submit formal application with applicable fees. Moreover, you can’t pursue your case in the court on your own. Thus, you will have to arrange for lawyer’s fees as well. Besides these there can be several other types of costs as well that you may have to borne in order to go bankrupt. Thus in UK, bankruptcy is not free and it involves some costs.

In England and Wales, the current applicable fee for filing for bankruptcy in any county court is £700 while it’s £712 if you want to file your bankruptcy in London. The applicable fee payable in the court essentially contains two parts – £175 fee for the court proceedings and £525 fee for the Official Receivers. In many cases, you can get a waiver in the court proceeding fees of £175. But you need to make a formal application for that in the particular form called EX160. Thus, it’s possible to go bankrupt by paying at least £525.

The applicable bankruptcy fee needs to be paid in full at the time of filing the petition. For many unfortunate debtors, paying this bankruptcy fee seems to be another debt. They found it unfair to pay for such fees when they have no money to even meet their basic expenses. This is the reason many debtors prefer to enter into an IVA arrangement where they can seek their creditor’s favour in terms of some part of the debt to be written off or an extended deadline for making payments. Thus, before seeking bankruptcy, people need to weigh all the pros and cons including the costs involved in becoming bankrupt. A professional guidance will be helpful before trying the bankruptcy measure.

Every year thousands of people in the UK file for bankruptcy because of their overwhelming debt situations. Not finding any other possible alternatives to way out their debt situation, they helplessly opt for bankruptcy and pay the necessary fee in the court. Besides paying court fees, bankruptcy can also demand your lots of precious time and money too.

Here are some brief details what other costs, besides court fees, you may have to incur and efforts you will have to make for going bankrupt.

1. Paperwork – You need to file your bankruptcy petition in a particular form. The forms will be available in the court. You can collect them and need to fill them appropriately. You'll need three copies of these forms. Besides these forms, you may have to attach your credit report, financial documents and tax returns. You can get your credit report for free or may have to purchase it. This involves another cost. You may have to pay fees to your accountant to get your tax returns filed and get an updated copy of it from them. These are the essential paperwork you need to do which doesn’t only involve additional costs but your precious time will also be needed.
2. Credit counselling costs – Before filing for your bankruptcy, it’s essential that you undergo a credit counselling. The court will need a proof that you had attended any credit counselling session. This is another added expense that you will have to bear while trying to file for your bankruptcy. The details of the fees to obtain such a professional service need to be furnished to the court. The credit counselling agency will also provide you a certificate and the budget plan helping you to manage your expenses. The copies of the same, you will have to file in the court.

3. Legal fees – Bankruptcy can have many adverse affects on your future life and you can’t afford to undergo the process in an unprofessional manner. Moreover, filing for bankruptcy is a complex process and for that you may need assistance of a professional lawyer. These bankruptcy lawyers will make your task easier and will try to reduce the severity of bankruptcy on your life. But in order to hire their services, again you will have to pay for their professional fees. The fees charged by the bankruptcy lawyers vary greatly and you need to find an affordable one for you. Some charge fees on per case basis while some charge on per hour basis. Whatever fees you are willing to pay, make sure that you are hiring an experienced lawyer. An inexperienced lawyer may prove affordable but he may spoil your case and you may have to suffer from far-reaching consequences.

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