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Could 2009 give you a new debt management solution with a debt relief order ?

Given the fact that so many UK consumers are struggling with debt problems at the moment it’s been clear for a while that the solutions on offer didn’t suit everyone. A lot of debt management solutions such as debt management plans, IVAs and bankruptcy at the moment are targeted beyond the scope of many consumers.

So, for example, at the moment, you might be willing to take on your debts but simply cannot get the help you need. You may not qualify for an IVA/bankruptcy route or you may not have a high enough income to be accepted for a debt management plan. In April 2009, however, things could change as the government is aiming to release a new debt management solution for people with fewer assets, resources and lower incomes – this is currently known as the Debt Relief Order or DRO.

This solution kind of works like an IVA or bankruptcy order in that it allows you to legally sort out your debts within a specific period of time with any debts left at the end of the period being wiped off. It is anticipated at this stage that this solution will be targeted at people who:
  • Owe less than £15,000 and cannot find an alternative solution to repay what they owe in a reasonable timescale.

  • Do not have any significant assets/savings (i.e. don’t own their own home and have less than £300 in savings).

  • Do not have more than £50 spare each month to repay their debts after they have paid their essential expenses.

  • Haven’t taken on a specific debt management solution (such as bankruptcy or an IVA, for example) in the last 6 years.

This will allow people who don’t have enough debts or income to qualify for other types of debt management to find a solution that could well work better for them. It is anticipated by the government that this will give lower income consumers the chance to eradicate their debts in a fair period of time.

Although the details have yet to be finalised it is anticipated that a Debt Relief Order will:
  • Last for around 12 months at which point all remaining debts will be wiped off.

  • Give consumers benefits from standard restrictions of contact from their creditors.

  • Place the consumer under the same kind of restrictions as a bankruptcy order (i.e. they cannot apply for credit over £500 without disclosing their status and will have limitations on running a business or acting as a Company Director).

So, if you think that this is a solution that could help you then keep an eye out in the press for details of release. At this stage it is thought that Debt Relief Orders will be available from 6th April 2009. These solutions could be a cheaper (they will most likely cost less than £100 to set up) and more cost and time effective way of sorting out your debts.
| Creditors Agreement to DPM | Prioritise Debts | Council tax payments | Student loans repayment | Add arrears to your mortgage | Debt Relief Order | Composition order |
| Debt Management Case Study | Walking Away From Debt | Are debts ever out of date | Facing a lifetime of debt | Paying for Debt Management Advice | Non-profit Debt Advice |