UP to 50,000 people could turn to new Debt Relief Orders as a way out of financial difficulty, said a report today.
With personal insolvencies set to hit record levels, DROs – which were introduced today – could appeal to those with low levels of debt, it said.
The report by KPMG said the number of personal insolvencies were set to exceed 150,000 in 2009 – an increase of 40% on last year.
DROs will allow consumers with debts below £15,000 and minimal assets or surplus income to write off their debts without entering into a full blown bankruptcy.
KPMG director Mark Sands said: “We expect this new approach to increase the number of people using personal insolvency as the way to deal with their debts.
“In KPMG’s view, DROs, together with the expected increase in unemployment, are likely to lead to record levels of personal insolvency of more than 150,000 in 2009.”
Potentially, more than 150,000 people are expected to enter into an Individual Voluntary Arrangement, be declared bankrupt or enter into a Debt Relief Order during 2009.