It appears that as of April of 2009 there will be another option for people with debts they cannot service; besides trying a repayment scheme or bankruptcy: Debt Relief Orders.
Debt Relief Orders will be aimed at those that have 15K or less of debts, assets of less than £300, disposable income of less than £50 per month and really cannot afford to go bankrupt, but need relief from their debts and creditors.
One aspect will be the same as bankruptcy in that after 12 months the debts are discharged and the debtor is starting over, fresh.
Debtors qualifying and deciding to use a DRO will not be required to go though the court system and can apply for the orders online using an authorised intermediary who is a skilled debt advisor.
This will make the process easier for those that qualify and also a cheaper alternative to bankruptcy, as the fee to do a DRO will be considerably less than the current fees to file for bankruptcy.
So if you have debts of less than 15K, you cannot do an IVA, as the minimum amount of debt required is 15K or more, also if you only have a surplus of income that is less than £50 a month, while you could consider a debt management plan, it may take years, many, many years to pay the debts off. Also, for those that cannot save the fees to go bankrupt, which currently are £495, if your income exceeds 14K per annum, a DRO is a solid option.
Another option and solution for people to be relieved of their debts, and also one that will help many people who could not go bankrupt, due to the costs associated with it, and/or found the entire process daunting.
