{"id":1793,"date":"2014-01-02T14:22:11","date_gmt":"2014-01-02T14:22:11","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=1793"},"modified":"2019-02-12T10:53:22","modified_gmt":"2019-02-12T10:53:22","slug":"bankruptcy-the-big-con","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/bankruptcy-the-big-con\/","title":{"rendered":"Bankruptcy – The Big Con"},"content":{"rendered":"\n

id you know that in the UK Bankruptcy<\/a> is cheap? Well, perhaps it is not exactly cheap if you are struggling to makes ends meet and you are unable to pay your bills. <\/p>\n\n\n\n\n\n\n\n

After all, unless you were insolvent you would not be considering bankruptcy in the first place. Still, it is relatively cheap compared to other jurisdictions and compared to some other insolvency solutions in the UK. The main reason for this is that you can do it yourself. For an outlay of \u00a3700, you can petition for your own bankruptcy in the UK and if you live in Northern Ireland the cost is \u00a3640.<\/p>\n\n\n\n

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In Ireland by contrast, if you wish to petition for bankruptcy, you have to pay \u20ac650 to the Insolvency Service of Ireland payable to the Official Assignee, a further \u20ac102.50 in stamp duty (or \u20ac122.50 in the case of a creditor petition) and a further \u20ac500 in advertising costs (in a national newspaper in Ireland). It is understood that new legislation if passed will eliminate the need to advertise your bankruptcy in a national newspaper in Ireland but you will still have to publish details of your bankruptcy in Iris Oifigiul (the State gazette) at a cost of up to \u20ac75.<\/p>\n\n\n\n

Let\u2019s go back to the UK and Northern Ireland. All you need to be able\n to do is to fill out a few forms. For some people this can be a tricky \ntask but for most people nowadays, it\u2019s a piece of cake. So if you have \n\u00a3700 and can fill out the forms all you have to do is to bring them to \nyour local bankruptcy court and ask for your petition to be dealt with. \nYou do not even have to use a solicitor.<\/p>\n\n\n\n

So why have certain firms been touting for business and offering to \ncarry out this process for a fee of up to \u00a31,700? For filling out a few \nforms, these firms are pocketing perhaps \u00a31,000 per case. It\u2019s a \nlucrative business but unfortunately it is at the expense of the poor \nunfortunate debtor who having become insolvent must now fork out an \nextra \u00a31,000 more than is necessary to avail of the bankruptcy solution.<\/p>\n\n\n\n

To drum up business, some firms have even claimed that debtors were \nmis-sold IVAs and have encouraged clients who were often in perfectly \ngood and affordable IVAs to throw it all up and to go down the \nbankruptcy route. In some cases debtors were several years into their \nIVAs and yet were encouraged by these firms to stop making payments into\n their IVA (thereby causing them to fail) and to petition for their own \nbankruptcy. They told debtors that \u2013 \u2018you may no longer be required to pay your current IVA payment\u2019<\/em>. These vulture companies even suggested that the debtor may be entitled to compensation \u2013 \u2018should it be found or you decide that you have been placed in an inappropriate debt solution\u2019<\/em>.\n If the unfortunate debtor believed these claims and decided to petition\n for bankruptcy, the touting firm then grabbed its \u00a31,000 fee \u2013 for \nfilling out a few forms \u2013 and walked away, having messed up the na\u00efve \nand innocent debtor\u2019s financial affairs.<\/p>\n\n\n\n

What marketing do these touting firms do? Where do they get the names of debtors already in an IVA? They simply trawl the Insolvency Register free online for the names of debtors in an IVA and then cold contact them. What could be simpler \u2013 or cheaper? This particular con has very low initial costs and very few entry barriers to the unscrupulous firm.<\/p>\n\n\n\n

And if the debtor should take the bait and stops paying into his IVA \nwhat happens? For a start, the failure of the IVA and the commencement \nof bankruptcy would mean that the clock would start ticking again in \nterms of the damage done to the debtor\u2019s credit file. Let\u2019s suppose that\n the IVA had already run successfully for three years. When the \nbankruptcy now commences the clock is reset and the credit file cannot \nbe repaired for another six years, instead of for just another three \nyears if the IVA had been allowed to run its course.<\/p>\n\n\n\n

For such touting firms to claim that an IVA was mis-sold when an \nalternative solution might have been more appropriate for the debtor \nimplies that the advising Insolvency Practitioner or IP in the IVA \u2013 the\n nominee \u2013 failed to provide the debtor with adequate explanations of \nall available options, including bankruptcy. The touting firms would \nthus be alleging that the IP had engaged in the very malpractice that \nthey themselves are up to their necks in \u2013 selling a service for \ncommercial gain only, regardless of the best interest of the debtor or \nindeed of the creditors.<\/p>\n\n\n\n

What can be done to stop such odious practices? The OFT has already \ntaken steps to prohibit and inhibit activities such as these by rogue \ntouting firms. Insolvency Practitioners themselves need to challenge \nsuch activities on a case by case basis, if only to protect their \nreputation for integrity and of course there is a role for the IP\u2019s \nregulatory body to defend the reputation of its members. The Insolvency \nService itself might also restrict access to the IVA Register so that \nonly those with a truly valid reason could search it. For example such \nsearches could be restricted to insolvency practitioners and lending \ninstitutions such as banks. The service perhaps should not be available \nto everyone free of charge. Strangely, in Northern Ireland you have to \npay to carry out a bankruptcy search but an IVA search is free. Both \nsearches are free and on line on the UK mainland.<\/p>\n","protected":false},"excerpt":{"rendered":"

id you know that in the UK Bankruptcy is cheap? Well, perhaps it is not exactly cheap if you are struggling to makes ends meet and you are unable to pay your bills.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[2],"tags":[],"class_list":["post-1793","post","type-post","status-publish","format-standard","hentry","category-bankruptcy-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1793","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=1793"}],"version-history":[{"count":2,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1793\/revisions"}],"predecessor-version":[{"id":1824,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1793\/revisions\/1824"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=1793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=1793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=1793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}