The Government has unveiled plans that would force debt collectors, lenders and bailiffs to give those with debt problems 60 days ‘breathing space’ during which the affected consumers could put in place some form of debt arrangement. During this two-month period, firms would be unable to take any enforcement action to recover the unpaid debts; and lenders would also be forced to freeze interest and charges.

As part of the bargain, people with debt issues would need to use the 60-day period to seek professional debt advice. The exception to this would be those with mental health issues, who will not need to seek debt advice, and in their case the breathing space period will not end after two months but will instead last for as long as they are receiving treatment for their health issues.

As well as loan and credit card debt, the breathing space proposals will also apply to council tax arrears, personal tax debts and benefit overpayments.

The proposals are expected to be introduced to Parliament later this year, but it will be 2021 before the changes become law.

City Minister John Glen MP said:

“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.

“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.”

National advice charity Citizens Advice welcomed the proposals. Its chief executive Gillian Guy commented:

“After years of calling for more support for people in debt, we’re pleased to see the government take action to protect people from action by creditors.

“This new scheme will help people struggling with debt keep a roof over their heads and food on the table while they pay back what they owe. This will also offer crucial respite from aggressive bailiffs.

“However, the scheme won’t cover everyone straight away. We’re concerned thousands of people with debts and deductions under Universal Credit are going to miss out on this support initially.

“With more people likely to seek debt advice as a result of this scheme, the government also needs to ensure specialist debt advice services are adequately funded.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article