INDIVIDUALS and families struggling with problem debt are to be given a new period of “breathing space” from lenders and public bodies.
Those who have fallen behind on debts such as loans and overdrafts as well as tax payments will receive 60 days of breathing space from 2021, where they will be protected from enforcement action from creditors.
Individuals must engage with professional debt advisers during this period to come up with a long-term solution to their debts and get back on track with payments.
Those undergoing treatment NHS treatment mental health issues will not need to seek debt advice during the 60-day period.
They will continue to receive the same Breathing Space protections, which will last for the whole of their treatment.
“Problem debt can have a devastating impact of people’s lives, putting a huge burden on individuals which can lead to family breakdown, stress and mental health issues,” John Glen, city minister, said.
“No one should be stuck in an endless cycle of debt and facing the ever-looming threat of invasive debt collectors.
“That’s why I’m introducing this new scheme, giving everyone access to the advice, time and support they need to both get their finances under control and get away from the perpetual stress and worry debt can cause.”
Phil Andrew, chief executive of the StepChange debt charity, said this would provide protection for vulnerable borrowers.
“Breathing Space and statutory debt repayment plans will fundamentally improve how people seeking to repay debt are treated, putting them in a far less precarious position,” he said.
“We’re particularly pleased to see the government’s confirmation that debts owed to government itself will be included in the scheme.
“Accessing Breathing Space through debt advice also adds a valuable incentive to help ensure more people in debt get the support they need.”