Debtors may be given more ‘breathing space’

23 Mar 2018

A recent announcement by the Treasury means that people in severe debt who can show willingness to seek advice could be given more “breathing space”. This follows the Government’s promise to implement such a measure in its 2017 manifesto.

This proposal would offer individuals legal protection of up to six weeks from further interest and charges, or enforcement action being taken against them on unpaid debts. To benefit from this “breathing space”, individuals with serious debt problems would need to show they are actively seeking debt advice.

Whilst this could be a great incentive to make people seek the advice they need and at an earlier stage than current statistics suggest is happening at the moment, this ‘space’ already exists through the Pre-Action Protocol for Debt Claims, which came into effect on 1 October 2017. Furthermore, creditors such as banks and building societies will often suspend interest and charges to allow customers in financial difficulties time in which to seek advice and/or make arrangements to repay.

Although the Government’s proposals currently extend only to those in “serious financial difficulties”, a number of debt groups and charities are pressing for these proposals to extend to anyone accessing psychiatric inpatient care or the care of a Crisis Resolution Team for mental health.

Draft legislation could be published by the end of this year or early 2019.

Find out more : https://www.gov.uk/government/consultations/breathing-space-call-for-evidence/breathing-space-call-for-evidence

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