From today it’s a lot easier to go bankrupt

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It is now easier than ever to go bankrupt in England and Wales. That may not sound like good news, but it is. Why? Because it can be the right solution for struggling people, but in the past it has proved too complicated or too expensive for them to choose.

Bankruptcy can be the right choice as it can help rid you of debt that may otherwise take many years to clear. It’s not running away from obligations, but finding a way to deal with them that allows you to get on with your life. (That’s unless you live in Scotland, of course, where there are different rules and sequestration may be the answer.)

But bankruptcy has serious implications for your financial future and should never be undertaken lightly, as the debt charity StepChange warns. If you have any assets, such as a house or car, they may be included in your bankruptcy.

It may also hit your job. For instance, you will not be able to act as a company director, and your financial status will suffer: bankruptcy will remain on your credit file for six years which could make it much more difficult to borrow in that time.

Against that, going bankrupt wipes out all your unsecured debts and gives you a fresh start. Which means it can prove a positive turning point for people who reach the bottom.

Changes being introduced today will make it simpler and cheaper. Applications to enter bankruptcy will be made online rather than by petitioning the court and assessed by a government adjudicator rather than a judge. That means the up-front cost of entering bankruptcy will fall. In total, it will now cost people applying online £655 to enter bankruptcy (down from £705). Both changes will make bankruptcy much more accessible to those who need it.

“The easier it is for an individual to enter an insolvency procedure that is appropriate to their situation, the easier it is for them to pay back what they can and to get back on their own two feet again,” said Phillip Sykes, president of R3, the insolvency trade body. “It’s better for the individual, their creditors and the rest of society.”

I wouldn’t recommend going bankrupt, but its good that it’s now easier for those that need to.