Yahoo Finance New rules to give 60 days ‘breathing space’ to people in debt
Brits struggling with problem debt will be entitled to 60 days of “breathing space” starting in 2021, under new rules announced by the government on Wednesday.
As long as they engage with professional debt advisors, people’s debts will be frozen and creditors will be prevented from moving in on them, the Treasury said.
The scheme, which the Money and Mental Healthy Policy Institute said “could genuinely save lives,” will cover a wide range of debts, including local and central government debts like council tax arrears and benefit overpayments.
Those receiving NHS treatment for mental health will not need to seek debt advice during the 60-day period, however, in acknowledgement of “the links between problem debt and mental health issues.”
The package also introduces a statutory debt repayment plan, which will offer similar protections to the breathing space scheme and allow people to repay their debts “over a manageable timeframe.”
The plan will adjust as people’s life circumstances change. For example, monthly payments could decrease if a person’s disposable income has fallen, according to the Treasury.
City minister John Glen cited the “devastating impact” problem debt can have on people’s lives as a reason to ensure that everyone can access the advice, time, and support they need to get their finances under control.
“No one should be stuck in an endless cycle of debt and facing the ever-looming threat of invasive debt collectors,” Glen said.
“Everyone experiencing a mental health crisis should have the opportunity to recover free from escalating debt fees, charges, and the threat of bailiffs arriving at their door,” Helen Undy, the CEO of the Money and Mental Health Policy Institute, said, welcoming the proposals.
Joanna Elson, CEO of the Money Advice Trust, said the scheme will “provide a powerful incentive for people to seek debt advice.”
The proposals will be put to parliament before the end of 2019 so they can be implemented by “early 2021,” according to the Treasury.
