Monday 1st of March 2010
Debt relief orders (DRO) can be applied for by people with very small pension pots from April 6th, the government has announced.
According to the Department for Business Innovation and Skills, DROs are a cheaper alternative to bankruptcy. Indeed, rather than resorting to bankruptcy for smaller amounts of unsecured debt, DROs can help clear what people owe without the negative consequences of bankruptcy so long as repayments are kept up with.
Unlike bankruptcy, DROs should remain a private matter and lenders may be more likely to view people more favourably as through a DRO they will get more of their money back.
Tom Howard, a spokesperson for the Consumer Credit Counselling Service, said: "For some, insolvency is the best option and DROs, where appropriate, are a useful tool in helping people confront and resolve debt problems."
He added that DROs can prove ideal for Britons who have few assets and little income, meaning bankruptcy is an option that many of them will not be able to afford.
During the fourth quarter of 2009 in England and Wales, there were 5,348 DROs undertaken by Britons, the Office for Nation Statistics recently revealed.
By Hayley Jones
