Millions with problem debt to be given 60-day ‘breathing space’
The government has previously announced plans to roll-out its 60-day ‘breathing space’ scheme in early 2021 to help people with problem debt.
During this time, enforcement action from creditors would be halted, while interest and fees would be frozen. They would also receive professional debt advice.
Further protections would also be given to those in mental health crisis, extending the breathing space until their treatment is complete.
Its impact assessment of the scheme published today revealed that more than 700,000 people across the UK will benefit from professional help in the first year, increasing to a million people each year a decade into the scheme.
The Treasury said that the scheme would help approximately 25,000-50,000 people in mental health crisis every year.
It added that it will cover debts like credit cards and loans, as well as a range of government debts. Creditors will also benefit, with over £400m in extra repayments expected in the first year as people get the support they need to get their payments back on track.
‘Better protections to stop further harm and help recovery’
Economic secretary to the Treasury, John Glen, said: “Being trapped in debt can be an incredibly difficult experience, and with interest and potential enforcement action to contend with, it’s no surprise how stressful the impact can be.
“Today’s figures underline just how critical it is that we roll out this policy, particularly on a day like today, where we should all work to reduce the stigma of mental health issues.
“That’s why we will introduce breathing space in early 2021 as planned, so we can level up the whole country and help millions of people to rid themselves of problem debt.”
CEO of StepChange debt charity, Phil Andrew, said: “We know that debt is bad for your mental health, with all the additional stress and anxiety that it can create. Around two in five people who turn to us have an additional vulnerability on top of their debt – and for half of them, that vulnerability is a mental health problem.
“However, the good news is that after debt advice, many people report improvements in their wellbeing such as being able to sleep better at night or cope better with day-to-day life.
“Breathing space will deliver much needed additional help in two important and connected ways. It will encourage more people to seek advice, and when they do, there will be better protections in place to stop further harm and help recovery.”