€920 charge for going bankrupt faces cut to €400
THE cost of going bankrupt looks set to be cut by more than half, but the cost for banks is likely to rise.
The Insolvency Service (ISI) of Ireland has applied to a special committee that regulates how the courts operate to have the fees reduced.
It currently costs a consumer €920 to go through the process of bankruptcy - now the intention is to reduce this to around €400.
Last week, ISI said it was cutting the fees for applying for state-approved insolvency deals in a bid to kick-start the new process and has now stopped charging application fees until the end of 2015.
And it will refund up to €750 for the services of a finance expert, known as a Personal Insolvency Practitioner (PIP), if a bank vetoes an insolvency deal.
Experts said the service, which is struggling to be accepted by heavily indebted people, was now effectively operating on a "no foal, no fee" basis.
But ISI was unable to announce any changes to the cost of going bankrupt, as this is a matter for the Superior Courts Rules Committee.
This is a body made up of the State's most senior judges, and includes lawyers. It sets out rules for how courts operate.
ISI Director Lorcan O'Connor confirmed that an application had been made to the Superior Courts Rules Committee to reduce the bankruptcy fees.
He said it was hoped the fees could be halved to around €400, but it was likely to be the end of the year before it happens.
It will be the second cut in bankruptcy fees. Last year, the fees were reduced from €1,500, while the term of bankruptcy has been reduced to three years.
There have been 300 bankruptcies registered so far this year, an eight-fold rise in the number of bankruptcies in the past three years.
But Mr O'Connor said this could jump to around 2,000 a year.
Head of the Irish Mortgage Holders' Organisation David Hall had called for the cost of bankruptcies to be reduced.
"It beggars belief that we are asking people who are having to bankrupt themselves to pay fees to do so," he said.
The current bankruptcy fees include €650 for the official assignee, €190 in stamp duty, another €20 for a separate stamp duty, and €50 to advertise the bankruptcy petition in Iris Oifigiuil.