Personal insolvencies `to rise by 40%` with Debt Relief Orders

Debt Relief Orders (DROs) - a new alternative to bankruptcy introduced to help low-income borrowers become debt-free - will contribute to a 40% rise in the number of people being declared insolvent this year, according to an accountancy firm.

KPMG expects up to 50,000 people to take out a Debt Relief Order in 2009, bringing the total number of people declared insolvent during the whole year to around 150,000.

Debt Relief Orders are available to borrowers with less than £50 of disposable monthly income, whose debts do not exceed £15,000 and whose assets do not exceed £300.

A spokesperson for debt management company Gregory Pennington said: "Debt Relief Orders have given low-income borrowers a new way of tackling their debt problems, and we expect many more people to receive debt help this year."

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