Uptake on the UK governments new Debt Release Orders has been much lower than was expected by the major debt management providers.
A number of reasons have been suggested for this, and one of the most popular amongst industry insiders has been pensions.
A Debt Release Order is a debt management solution which became available this April, aimed at people with lower levels of debt and income than those eligible for IVA's .
To qualify for a DRO a person needs to owe less than £15,000, be unable to pay their debts and own assets of less than £300.
Pensions have become an issue with DRO's as unlike in more established forms of insolvency, a pension is seen as an asset.
With over 99% of pensions having a value of over £300, almost any kind of pension will disqualify a person from applying for a DRO.
Many in debt industry see this oversight on behalf of the government, as both IVA's and bankruptcy do not usually involve pensions in any way shape or form.
Many industry professionals are blaming the inclusion of pensions as a major reason why DROs have been so unpopular.
Other reasons mooted for the poor performance of debt relief orders have been the low fees which can be charged for DRO's by insolvency practitioners ,and the low numbers of companies who have be accredited to perform DRO's.
Perhaps in the current economic climate, creditors are just more likely to agree to an informal arrangement such as a Debt Management Plan.
But whatever the reasons, the underperformance on debt relief orders against predications have been significant.
Mark Sands from KPMG has stated that they expect the uptake of DRO's to come nowhere near their estimate of 150,000 before the end of 2009.