I’ve been asked this question many times over the years. After all, if you are parting with £680 to make yourself bankrupt, it is reasonable to be concerned that you are going to achieve the desired result and not have your application denied.

The criteria for a successful, approved application for bankruptcy in England and Wales by a debtor are:

• The debtor is unable to pay his debts
• The debtor is entitled to make his application in England or Wales due to residing or carrying on a business there.
• There is no other outstanding bankruptcy petition pending against him (by a creditor)
• No other bankruptcy order has been made in respect of debts subject to the debtor’s application

This short, precise answer to the question is for individuals applying to make themselves bankrupt but you should also know that a creditor can petition for your bankruptcy as well.
Whilst the basic criteria are straightforward enough, we need to dig in a little deeper to get the full picture.

Online Bankruptcy Application

Your application is made online and will be considered by an adjudicator. The adjudicator works for the Insolvency Service. They will go through your application to ensure that you are entitled to a bankruptcy order.

There are some inherent checks built into the system to verify that it is genuinely you applying for your bankruptcy, including a National Insurance number verification and a credit check.

Of course, the adjudicator wants to be sure that it is genuinely you, the debtor, making the application and not some maliciously-motivated individual lodging an application for your bankruptcy!

Before you submit your application, you will be asked to confirm that you are the person named in the application. It is okay for someone to have assisted you or completed the application on your behalf.

You are unable to pay your debts

The adjudicator will verify your insolvency by assessing your financial liquidity. In other words, they need to be certain that you do not have the means to pay your debts.

First and foremost, that means they will look at your income and expenditure to see if you have a surplus of income each month from which you can reasonably meet your contracted debt repayments. This is usually all that the Adjudicator requires to ascertain that you are unable to pay your debts.

In rare instances, a debtor over the age of 55 might have access to a lump sum from a personal pension fund that allows him to pay off his debts. It could in effect make the debtor solvent.

A deep discussion of that here is beyond the scope of this article but if that might apply to you, you should seek professional advice before making your application.

Minimum debt level for bankruptcy

You might be surprised to hear that there is no minimum level of debt required to apply for bankruptcy. Not being able to pay your debts is the only legal requirement for applying.

Nevertheless, bankruptcy is usually a drastic solution for lower levels of debt. Of course, as I say frequently to clients, any amount of money is a lot if you haven’t got it.

Everyone should consider alternatives first. A Debt Relief Order or some other debt solution is usually better for smaller amounts of debt.

You should always see bankruptcy as the debt solution of last resort. There ARE alternatives.

If a creditor wants to make you bankrupt, then there is a minimum debt threshold of £5,000.

Bankruptcy jurisdiction

Your application must demonstrate to the adjudicator your entitlement to apply for bankruptcy in England or Wales.

In simple terms, that means that you live or work in England or Wales. Or that you have lived or worked there within the previous three years.

It is worth adding that the location of your assets or debts are not relevant criteria in terms of where you make your application, only where you live or work. Assets held overseas still fall into your bankrupt estate.

The issue of bankruptcy jurisdiction has fallen under close attention in bankruptcy applications in England and Wales over the years. The main reason being that European debtors have engaged in what became known as bankruptcy tourism.

In other words, some Europeans considered bankruptcy in England and Wales as a more attractive, easier place to go bankrupt than their own country. The main reasons for that appear to be a shorter and less onerous period of bankruptcy than in many other European jurisdictions.

There is nothing wrong with choosing where you file for bankruptcy. The important point is to ensure that you satisfy the legal requirements. For England and Wales, that means being able to prove that you really have been living or working there. That it is your centre of main interests; your habitual residence.

Hence, anyone applying for bankruptcy in England and Wales with overseas assets and debts can expect a higher level of scrutiny by the adjudicator to ensure that they really have been living or working there within the previous three years.

Naturally, for the vast majority of applicants, this issue is not one they need to be concerned about.

How much does it cost to declare bankruptcy?

The current fees payable total £680. The fees consist of an application fee of £130 and a deposit of £550. The application fee covers the costs of the adjudicator in assessing your application. The deposit goes towards the costs of the administration of your bankruptcy.

Can I pay for my bankruptcy in instalments?

The good news is that once you commence your online application, you can pay by instalments. However, you cannot submit the application until the fees are paid in full. You may pay the fee instalments in multiples of £5 by debit or credit card. The application system automatically updates after you make each payment and shows the balance still owed.

Once you have paid the fee in full, you may submit your application. The adjudicator will then consider whether he can make the bankruptcy order.

What percentage of bankruptcies are denied?

There does not appear to be any published data on the number of applications rejected. The most recent Insolvency Service Annual Report shows that bankruptcy tourism has been a reason for applications to be refused.

Making the bankruptcy order

As long as your bankruptcy application is as complete as possible and you have satisfied all the points above, the Adjudicator will make the bankruptcy order against you.

Don’t worry if you cannot provide every last detail in your application. It is common, for example, to miss off an address or account number. Such omissions will not lead to you being denied your bankruptcy application and you can provide the extra information to the Official Receiver once the bankruptcy order has been made.

The online application is an efficient process and much better than the old process of having to go to court! In most cases, the adjudicator will notify you of the bankruptcy order within just two or three days.

Please keep an eye on your emails in the days following your application. The adjudicator will advise you of his decision and send you a copy of the bankruptcy order together with a letter advising you of what happens next.