By Bob Howard
BBC Radio 4's Money Box
Debtors can apply to the Insolvency Service through an intermediary
A new way to help people on low-incomes clear their debts has been criticised by a leading creditor organisation.
Debt Relief Orders are available to people who do not own a home, have less than £300 in assets and a disposable income of no more than £50 a month.
The government says the orders will offer hope to people in debt and keep them from using loan sharks.
But the Civil Court Users Association says the help for debtors is at the expense of creditors.
Debt Relief Orders can be applied for from 6 April if the debts owed are no more than £15,000 and there is no foreseeable way the money can be repaid.
Instead of going through a court, debtors apply to the Insolvency Service through an intermediary like Citizens Advice.
"Karen" from North Yorkshire said she is going to apply.
She took out loans when she had a job. But now she owes £8,000 to a number of creditors, has almost no assets and no earned income.
She said the strain of being in debt is affecting her health: "It got to the point where I was actually physically sick last week. I still have sleepless nights. I just don't have the money to pay it."
A Debt Relief Order costs £90, which can be paid in instalments rather than the hundreds of pounds it costs to go bankrupt.
Citizens Advice estimates around a third of clients they advise on debts each year could be eligible - around 50,000 people.
Sue Edwards from Citizens Advice has welcomed their introduction.
"They offer people on very low incomes - who cannot pay their debts off within their lifetime - light at the end of the tunnel," she said.
If the order is granted, the debts are discharged after a year.
Some of creditors are worried that they are too cheap and too easy to apply for, given the serious situation people with debts find themselves in.
Jeremy Sutcliffe, vice president of the Civil Court Users Association, told the programme: "We believe the government is continually assisting debtors at the expense of creditors.
"We think these sorts of things get in the way."
The Insolvency Service said that intermediaries will be expected to make basic checks and anyone found to be dishonest can have their order revoked.
Pat McFadden is the government minister responsible for the Insolvency Service.
He believes there are sufficient measures to safeguard creditors' interests and the orders are needed to stop people in debt resorting to desperate means.
"For many it can be a hopeless situation. If it was unresolved, they could even find themselves being driven into either very high interest lending or even loan sharks."
BBC Radio 4's Money Box was broadcast on Saturday, 28 March 2009 at 1204 GMT