You are here: Home - Credit Cards & Loans - News -

Millions with problem debt to be given 60-day ‘breathing space’

0
Written by: Paloma Kubiak
06/02/2020
Millions of people trapped by problem debt will be given a 60-day grace period where interest, fees and enforcement action are frozen.

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.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Surviving spouse entitled to greater share of estate if no will in place

A rule change from today means a surviving spouse is entitled to a greater share of their deceased partner’s estate...

Close