In April of next year the government are introducing Debt Relief Orders, and these orders are a way for low income borrowers with debts to declare themselves bankrupt online without having to go near a bankruptcy court or deal with the traditional hassles of filing for bankruptcy. However, there are concerns amongst some officials that DROs could make it too easy for consumers to escape their debts, and that the system is open to abuse.

The purpose of DROs will be to give low income borrowers with debt a way to file for bankruptcy without incurring the charges or going through the hassle often linked with this process. There will be strict criteria in place, and in order to be eligible applicants will have to have under £15,000 of unsecured debt, no more that £50 a month in surplus income, and assets of £300 or less. They will also need to show that they cannot afford to make repayments on their debts.

After one year, if the applicant is successful, the debts will be discharged. However, applicants will have to advise authorities if their financial circumstances change for the better over the course of that year, as the DRO can be cancelled. However, officials state that it could be difficult for authorities to monitor the applicant’s financial situation with this form of filing.

One official stated: ‘It will be difficult for the intermediary to carry out a detailed investigation into the affairs of the debtor because it just wouldn’t be worthwhile financially. Ordinarily, the trustee of a normal bankruptcy order has further powers to investigate the individual, more statutory muscle. This loophole may make it easier for people to break the law.’

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