Duchess of York may owe £5 million, seeks to avoid bankruptcy

Prince Andrew recently returned from a family cruise and is now dealing with the Duchess of York's finances. (Photo by Andrew Milligan - WPA Pool/Getty Images)

Today, August 8, reports came in that the Duchess of York is considering bankruptcy as one of her options, and that she has indeed been advised to do so by at least one royal aide. Additional details of the level of the Duchess' debt have also been released.

Duchess of York may owe £5 million

According to The Mail of Sunday, the Duchess of York may owe around £5 million—at least twice the amount of previous estimates. The last several weeks have seen new revelations about the Duchess' spending, including her debts to Buckingham Palace's mail room, to local British businesses and department stores. She also laid off her entire support staff.

In response to the newspaper story, the Duchess, ex-wife of Prince Andrew, issued a statement that she had paid off her personal debts.

Sarah Ferguson may declare bankruptcy

According to reports, Sarah Ferguson may declare bankruptcy to give herself a fresh start. She is reportedly in negotiations with Oprah Winfrey regarding a talk show on Oprah's new TV network—but that won't happen until 2011. According to her spokesman, the Duchess is trying to avoid bankruptcy.

The spokesman also noted that the Duchess' business debts were "being managed." This may be by Prince Andrew and his staff; the issue has allegedly come up between the Queen and Prince Minister Cameron in their weekly meeting. The Queen is "deeply concerned."

However, the figure of £5 million has been denied as exaggerated; sources said that the debt is more like £2 million.

While it may be embarrassing, experts claim that voluntary bankruptcy may help

Much as all concerned are trying to avoid it, Richard Sorksy of the UK Insolvency Helpline said that the process of bankruptcy would help. It would allow the Duchess to walk away from her debts. Another expert has stated that the bankruptcy would be over quickly, fill the news for a week, then be finished.

However, the Duchess does not appear to want to. While her finances have slowly been unraveling since the media sting in May, she owes debts on both sides of the Atlantic. She has also been in debt before. There is a possibility that she may be able to dig out of the situation, albeit with the help of some very well-placed friends.

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