The new bankruptcy steps for Self Petition

From 6th April 2016 if an individual wishes to declare themselves bankrupt they now have to make an application online as part of the Insolvency Service.  They no longer have to go to court.

If a person or organisation is owed £5,000 or more by an individual, they still have to make a court application to make the individual bankrupt.

A self-petition is now an online application form, costs £655 and can be paid in instalments.

Once the online application form is completed and the fee paid in full, the application is placed by the Adjudicator. The Adjudicator is in the employment of the Insolvency Service and they may:

  • Agree the individual’s application
  • Request further information from the individual

If the Adjudicator agrees with the application, the Official Receiver is notified and the Adjudicator sends you the bankruptcy order.

Why is this happening?

This has been introduced in order to remove the self-petition process from the courts and should speed up the process as the individual is no longer waiting for a bankruptcy hearing date.

It ought to streamline the bankruptcy process as well as the information the individual inputs into the initial application should be capable of being automatically updated to the Official Receiver’s systems.

The costs previously associated with bankruptcy (being £850) have proven to be very difficult for an individual to amass together. So the ability to pay the reduced application fee of £655 via instalments will appeal to people.

Perceived problems

Should someone intend we suspect it may well be possible to “self-petition” fraudulently in order to cause an individual significant personal and financial difficulty.

The Insolvency Service have not mentioned within any of their published documents what checks they will put in place to prevent such a malicious act, nor how they would propose to rectify such a situation.

It is felt that this could easily be a risk factor between a divorcing couple who are joint owners of a property.  Bankruptcy can have significant impact and, in general terms, when it comes to timing, whichever process gets approved by court first (either bankruptcy or divorce), will take precedence.

Published - 06.04.16

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