Debt relief order is a formal option for debtors to get out of debts. It was introduced in April, 2009 and since several debtors have used this opportunity to clear their debts but it has also received critics from users and financial experts. People say that DRO doesn’t guarantee any incentive on getting employment. As according to the agreement, debtor will need to pay off their debts on any improvement in the financial situation. People are surprised with these terms as if they have amount only sufficient to pay off priority debts like rent and utility bills and not to pay off lenders mentioned in DRO.
Debt Relief order also now allow approved pension: If debtor has pension fund exceeding his assets from £300 then applicant was not eligible to apply for DRO before 6th April, 2011. But government has made changes in these terms and now pension holders are also eligible for DRO. Approved pension is defined in section 11 (2) of Welfare Reforms and Pension Act 1999. It is defined for the purpose of DRO and it means personal and occupational pension scheme will not be accepted. DRO is one of the easiest parts of debt consolidation if you have lowest income.
According to initial estimates of DRO one in eight applicants is not eligible to get DRO even after fulfilling the criteria due to small intimation in their assets over £300 due to pension. DRO is restricted on some essential qualification criteria. Those are:
These are some necessary criteria to get debt relief order approval. It is alternative of bankruptcy. However, this plan is not much successful and helpful for debtors as there are several debtors who are unable to meet with these eligibility requirements due to little differences.