Leading debt advice charity StepChange is to launch its Covid Payment Plan (CVPP) in mid-November, designed to give people more time before being required to resume full repayments on their debts. The plan was developed after consultation with HM Treasury and the lending sector.
The CVPP essentially provides for a year-long transition back to full levels of repayment. If clients are unable to scale back up to full repayments over the 12-month term of the CVPP, then they may instead transition into longer-term debt solutions.
The Plan will not be used for any clients with an existing County Court Judgement or decree. StepChange admits that it cannot guarantee that entering into the Plan will not damage the client’s credit rating; and Advice Scotland has said that it believes the Scottish Government’s Debt Arrangement Scheme is a superior arrangement for anyone resident in Scotland.
StepChange estimates two million people are currently unable to meet their full contractual repayment commitments as a result of financial difficulties that can be attributed to Covid-19.
Phil Andrew, chief executive of StepChange. said:
“What’s driven our approach is the recognition that, within our own toolbox, most of the existing solutions that we could provide are long-term strategies to enable people to tackle entrenched problem debt – they were not designed to cope with the short, sharp, temporary debt shock that so many people have uniquely experienced due to the pandemic.
We hope that the CVPP will make a valuable contribution to the transition to recovery, both for households and for the wider economy.”
Lorna Allan, CIO of StepChange, said:
“The coronavirus pandemic has created a period of widespread financial instability for households, with many people receiving unforeseen knocks to their finances. That’s why we have developed CVPP, a product to help those who need to get back on their feet quickly. In a similar way to longer-term payment plans, StepChange will work with CVPP applicants to determine the number of creditors they have, what they owe, and what they are able to pay.
StepChange will then liaise with all creditors on behalf of the client, who will be required to make one single payment per month to StepChange as per their agreed plan for the next 12 months – with the option to leave or to switch to a different debt solution if their circumstances change during that period.”
John Glen MP, economic secretary to the Treasury, welcomed the StepChange initiative by saying:
“It’s important that people who are struggling with a temporary hit to their finances can access tailored support and so I welcome StepChange’s Covid Payment Plan, which will help people get back on to a stable financial footing in a shorter time frame.”
Regardless of whether borrowers choose to use the services of a debt charity, the onus is on
lenders and other credit providers to provide the necessary tailored support to any borrowers who are in financial difficulty as a result of the pandemic.
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 of the facts, circumstances or legal position may change after publication of the article