The new ‘Breathing Space’ scheme will protect individuals with problem debt by “freezing interest payments and halting enforcement action from creditors”, it has been revealed.
Announcing the new measures, the Treasury said the scheme will cover a wide range of debts, including personal tax, benefit overpayments and council tax arrears.
The move comes after new research reveals that thousands of individuals and families are struggling under the burden of ‘problem debt’ – where interest rates, fees, and charges mount up quicker than someone is able to repay them.
The new scheme is designed to help out individuals by giving them a 60-day window to speak to a professional debt advisor and formulate an achievable repayment plan to get their finances back under control.
The measures have also been aimed at those suffering from mental illness, halting enforcement action and freezing charges while they receive medical treatment – lasting until they are able to seek professional advice.
Commenting on the announcement, City minister, John Glen, 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, CEO of StepChange Debt Charity, added: “People looking for a sustainable way to repay their debts have traditionally had little protection, leaving them vulnerable to inconsistent approaches by different creditors that can harm their chances of recovery – something as a debt charity we’ve long felt needed reform.
“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. 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.”
According to the charity, a huge 657,000 people used its services in 2018, a six per cent rise compared to 2017.