Debt breathing space scheme welcomed by East Anglian groups
PUBLISHED: 17:38 14 November 2017 | UPDATED: 17:38 14 November 2017
Hundreds of people across the East of England may have a better chance of solving their money problems if the government introduces a proposed "breathing space" for those struggling with debts.
The treasury confirmed help for those in debt – which could include a short-term freeze on interest and charges while they get their finances in order – will be the subject of a consultation, and should become law by 2019.
Financial advice bodies and charities have welcomed the review, which they say could benefit both debtors and creditors.
Mark Upton, chairman of debt advice trade body R3’s eastern branch, said: “While any breathing space should be seen a last chance to seek help and must find a balance between the person in debt and their creditors, introducing such an option would benefit both parties.
“If people find it easier to access a debt solution that suits their situation, they can repay more money to creditors and get back on their feet much more quickly, no longer burdened by debt.”
Under the proposals, people affected by debt would be exempted from further interest, charges and enforcement action for a period of up to six weeks.
A consultation will run until January 16 to examine how the scheme would work, how creditors and debtors would be affected and how to design a statutory debt management plan.
Mike Lamb, who runs King’s Money Advice, based in Norwich, said the advice service usually asked creditors to impose a voluntary hiatus, but it was at their discretion. He said: “Breathing space is one of the first things we ask for when someone comes to us and if there was something to make that statutory it would be good. You do want debts paid and what you don’t want is debt added to debt.
“At the moment most credit card companies can keep charging interest and fees contractually so it is up to their discretion whether they do that or not.”
Recent research by R3 and ComRes found nearly two-in-five (37%) adults in the Eastern region said they were worried about their current level of debt, with almost half (47%) of those citing credit card repayments as the reason for their fears.
Three in 10 (30%) East of England adults said they struggled through to payday, with the cost of food highlighted by 64% as a key challenge.