Debt is a big problem facing much of Britain's population. The credit crunch aside, the general consensus is that people are heading towards a tendency to live beyond their means and follow a lifestyle unmatched by their budget. This is resulting in a spiralling debt which threatens to cause an upsurge in bankruptcies all over the nation.

Plans have been announced to introduce a new type of debt solution based on bankruptcy; Debt Relief Orders. This acts in the same way as a declaration of bankruptcy in that your debts will be cleared off after a certain period of time provided you stick to a pre-agreed repayment amount for that period. A DRO will be available online, and is intended to help out those people who cannot afford to pay court costs incurred in a standard bankruptcy.

In addition, a person doesn't actually have to be bankrupt in the traditional sense in order to file a DRO. As long as you have debts of less than £15,000 which you struggle to pay, plus a disposable income of less than £50 per month and few or no assets, you could be eligible for a DRO.

If you file for a DRO and your circumstances change within the year, resulting in a higher income, you would have to inform the Insolvency Service who may cancel the order if it's decided you can afford to pay off your debts in the normal manner after all.

Although DROs won't be policed as stringently as the more established debt solutions such as IVAs and bankruptcy, it's still important to be 100% honest when filing. If it's discovered after the order that you have falsified information on your application for a DRO, you could face trial for a civil or criminal offence.