Can’t afford the Bankruptcy fee – What can I do
- 21 Oct 2021
You may think that the bankruptcy fee (currently £680 in England & Wales) is just not affordable. But there are different ways you could raise the funds you need.
Included in this article:
- Borrow or sell your car to pay your bankruptcy fee
- Apply for a grant
- Use a different debt solution with no upfront fee
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Can you borrow or sell your car to pay your Bankruptcy fee?
You are allowed to borrow the money. Ideally a friend or family member might be able to help you out. If you have access to credit (perhaps an available balance on a credit card or overdraft) you could also use these funds. Before doing this you should take further advice from us.
If borrowing is not possible you could sell something you own. One of the main things to consider is your car. If it is worth more than £1000 you may not be able to keep it anyway. So you could sell it before hand, buy something cheaper (for £1000 or less) and pay for your bankruptcy with the excess funds.
Once you have decided to go bankrupt you can stop paying your unsecured creditors. The money you save can then be put towards the fee. If they contact you, explain you are going bankrupt and ask them to put your account on hold. Most will be helpful.
Contact us for the best advice on borrowing or selling your car to pay the bankruptcy fee. Call 0800 044 3194 or complete the form below.
Apply for a grant to pay your Bankruptcy fee
There are several charitable organisations that offer grants designed to pay your Bankruptcy fee on your behalf. The organisations we are currently aware of that offer grants are listed below. They may be worth contacting for further information.
In addition to the list above check out TURN2US. This is a charitable organisation who may be able to connect you with suitable grant providers.
You may be eligible for a grant based on the fact you have a low income, health issues or other specific needs. Before you can apply you will normally have to be affiliated in some way with the organisation. In the case of the energy trusts you usually need to be one of their customers.
In the past if you were in receipt of certain benefits you may have been eligible for a reduced bankruptcy fee. Since the application moved online in April 2016 this is no longer the case. Everyone has to pay the full amount regardless of status and income.
Use a different debt solution with no upfront fee
If you can afford to pay at least £100/mth towards your debts you should consider an IVA. There is no up front fee. The payments last five years but after that you will be debt free because any outstanding creditor balances are written off.
You could also consider a debt management plan. This also requires a monthly payment (normally of at least £100) but is less formal than an IVA. It can give you a breathing space from your creditors. You can stop the plan at any time and then go bankrupt then if you wish.
If your debts are less than £20,000 rather than bankruptcy you might qualify for a Debt Relief Order (DRO). This gives a very similar outcome to bankruptcy but costs just £90.
Unfortunately not everyone can do a DRO. There are strict qualification criteria which you must meet before you can apply.
Hello. You say above that I can sell my vehicle to fund a bankruptcy. How is this a safe option if the Trustee in bankruptcy may come to a conclusion that the price stipulated in the contract of sale is below market value and apply to have it set aside?
Hi AmyA
Selling a vehicle is actually a very common way of funding the cost of bankruptcy. I have been through the process many times with my clients over the past 25 years of assisting people to go bankrupt.
No only can you fund the cost of bankruptcy, but also, depending on the value of the vehicle being sold, you are allowed to use the sale funds to a cheaper replacement car to fit within the exemption rules.
Of course, you need to take car that you sell for fair market value. Before selling, I would recommend checking the quoted value on We Buy Any Car.com. The OR will be happy that there is no transaction at undervalue if this price is adhered to.
You can read more about selling your car before going bankrupt by clicking on this link: Can you sell your car before you go bankrupt
If your would like further advice about going bankrupt, give me a call (0800 044 3194). The advice is free and confidential.
I’m currently with step change , I’m over £40,000 in debt I pay £95 a mth which I now can’t go over as have done income and expenditure with them , however more debts are cropping up and they have said bankruptcy is a option but I don’t have £630 for this can I get a grant?
Hi Arty
If you have nothing to loose (ie if you are not a home owner and your car is worth less than £1000), I would agree that bankruptcy would seem a sensible option for you.
The application fee is £680. This can be paid in instalments but the application itself cant be submitted until the amount is paid in full.
In terms of getting a grant to cover this fee, there are various organisations that might be able to help. These are listed in the second section of the above article “Apply for a grant to pay for your bankruptcy fee”. If non of these can help then you might have to just save up the fee.
You do this by stop paying Step change. It will take you around 6 months to get together the amount you require (or thereabouts). If your creditors start to chase you in the mean time, tell them that you have been advised to go bankrupt and ask that they put your account on hold to allow you time to get your application done. They will normally be willing to help. I have advised many people to do this in the past and it can work quite successfully.
Hi.
I’m in the process of bankrupcy. Filled online form in and paying the fee little by little. I was on an iva, will my debtors contact me and can i tell them im in the process of bankrupcy?
Hi Darryl
If any of your creditors contact you while you are saving for the bankruptcy fee don’t worry. Just be honest with them. Tell them you have taken debt advice and have decided to go bankrupt. Ask them to put your account on hold to give you time to save the necessary fee. As soon as they know you are going bankrupt they will normally be helpful with this.