Problem debt to be dealt with thanks to new ‘breathing space’ scheme

Business News Business Update News

The Government is backing a new Breathing Space scheme that is intended to protect individuals with problem debt and allow those in mental health crisis to get further protection while they receive treatment.

City minister John Glen has announced the new plans which will see the introduction of a 60-day Breathing Space period from 2021. This will be available to people with problem debts and will offer protection from enforcement action from creditors and see their interest frozen.

Under the plan, in order to receive assistance, individuals must engage with professional debt advisers so they can put together a long-term solution to their debts and start making repayments.

The Government has also confirmed that individuals receiving NHS treatment for mental health crisis will not need to seek debt advice during the 60-day period and will continue to receive the same Breathing Space protections, which will last for the whole of their treatment.

The package will also include a Statutory Debt Repayment Plan (SDRP) for those with problem debt, which will help individuals to repay their debts over a manageable timeframe. SDRPs will adjust as peoples’ life circumstances change, meaning decreasing monthly payments if disposable income is reduced.

The Breathing Space scheme will now be put to Parliament before the end of the year, so that it can be implemented in early 2021.

City minister, John Glen, 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.”