From 6 April 2016 there are key changes to the debtor bankruptcy process.
Under the old regime, a debtor had to present a petition at court for his own bankruptcy, even where there was no dispute that the debtor was unable to pay his or her debts. There would often be problems with this process owing to mistakes with paperwork, non-payment of fees or applications made in the wrong court, which would lead to the petition being rejected.
There has also been a rise in the number of Debt Relief Orders being made which has reduced the number of bankruptcy petitions being presented. A Debt Relief Order may be available to individuals whose debts total less than £15,000 and who have minimal assets.
Under the new regime, applicable from 6 April 2016, a debtor will no longer petition the court for their own bankruptcy. Instead, debtors must make an online application to the adjudicator, a new office appointed by the Secretary of State and sitting within the Insolvency Service (IS) who will consider it. A petition may only be made where the debtor is unable to pay their debts.
The IS operates an online portal for debtor’s bankruptcy application at gov.uk, called Online Debt Solutions. On the site there is guidance about the process as well as a 15-minute podcast that provides information on the process.
Once a debtor makes an application using the portal, the application must be acknowledged by the adjudicator; the application is deemed made when this acknowledgement is given. The adjudicator will apply to the Chief Registrar to add the application to the register of pending actions.
The adjudicator must make the bankruptcy order if the statutory requirements are satisfied. These requirements are:
1. That the adjudicator has jurisdiction to make the order that debtor is unable to pay his or her debts;
2. That there is no other application pending in relation to the debtor at the date of determination; and
3. That no order has been made in respect of any of the debts which are the subject of the application at the date of determination.
On the making of a bankruptcy order, the adjudicator will deliver the bankruptcy file to the Official Receiver, who will send a copy of the order to the debtor.
As at 6 April 2016, the debtor’s bankruptcy petition fee is £655; £525 Official Receiver’s fee and £130 Application fee. These are lower than the fees payable under the old regime.
Although debtors are no longer be able to make a paper bankruptcy application to the court, the new process promises to be quicker, easier to understand and more efficient.