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Local solicitors have warned that increases in the fees payable when presenting Bankruptcy or Winding-Up proceedings to the Courts could make creditors think twice about taking such action, leading to further problems.

On 6th April the amount of the deposit payable by a creditor who wishes to present a Bankruptcy Petition is due to rise from £430 to £600 and for a Winding-Up Petition it increases from £715 to an incredible £1,000. A petition is usually issued by creditors who are owned money by a company or individual who appears unable to pay.

Kate Robbins, Debt Recovery Manager at Nottingham based Roythornes Solicitors said: "This is a massive increase in fees which has come just at the wrong time for creditors. Whilst there are certainly costs involved in these actions, to bring forward increases of 40% in the current climate is quite astounding. The Government are keen to demonstrate that the taxpayer should not pay for the cost of a petition, but I find it hard to see how increases of these levels can be justified, when many businesses are already struggling to recover monies due to them."

In a worst case, the fee increase could mean that a creditor does not issue a petition and the insolvent person or company continues to trade with others, further deepening the problem.

Kate continued: "Taking action against insolvent companies and people is a benefit to the whole of society, and we feel that at least partial funding from the Government in well justified. Whilst strain on the public purse is significant at the moment, so is the strain on businesses from bad debtors. We collect over £30m each year on behalf of local and national clients and have seen an increase in the number of people having to chase their payments. Its a sign of the times that more and more people are paying their bills late or not at all. The fact that the fees are having to increase at this time is a great shame, as sometimes bankruptcy or liquidation is the only option."