“Breathing Space” on the Horizon for Those in Debt

by Rhys Hicks

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The government has this week confirmed it will launch a consultation on allowing people with problem debt a six-week payment holiday. It is anticipated it will become law by 2019.

The concept, originally promised in the Conservative party’s manifesto, has been welcomed by the debt charity Step Change.

It also comes after the House of Lords had threatened to vote down Tuesday’s Financial Guidance and Claims Bill should the amendment to include the idea not be introduced.

Dubbed “breathing space” for those experiencing financial difficulties, the plans will afford debtors a period of six weeks whereby further interest, charges and enforcement actions are prohibited. It is hoped this period will allow consumers to address their debts and put a plan in to place to prevent their situation spiralling further.

A reprieve

The plans could also include legal protections to better protect consumers from further creditor action once payment plans are put in place.

While welcoming today’s news, Step Change have sounded a cautionary note that protections could go further. The charity’s chief executive Mike O’Connor says, “We know from the experiences of our clients that continuous protection between the initial breathing space period and any statutory repayment plan is vital.”

Economic Secretary to the Treasury, Stephen Barclay explains, “For many people in the UK problem debt seems impossible to escape. Its effects can be far-reaching, impacting all aspects of a person’s life and leaving them feeling helpless.”

“That is why we are working to give people who are overwhelmed by debt, more time to seek advice, find a workable solution, and help get their lives back on track.”

A chance to tackle debt

Indeed, while the government’s plans are a welcome announcement for those in extremely tough situations, it’s important to see a repayment holiday as an opportunity, not a resolution.

As Step Change allude to, the most important aspect of helping people out of debt is implementing a workable ongoing- solution.

The proposed “breathing space” will provide an opportunity for debtors to get in touch with a debt adviser and put in to place a plan which will genuinely improve their situation.

There are a whole host of options available to individuals in financial difficulties. By getting in touch with a debt adviser, you are immediately reducing the burden on yourself and the associated stress.

Getting help

Pertinently, many creditors already often provide a payment holiday facility. If you haven’t already, it may be worthwhile contacting your creditors to let them know of your situation.

They may be able to help by putting in place a payment plan, or indeed giving you some time to get funds together. Of course, if you are hesitant about this or perhaps you’ve already done so, then it’s time to seek some professional debt advice.

Charities such as Step Change, National Debtline, the Citizens Advice Bureau and Money Advice Service are on hand to offer free, non-judgemental and impartial advice.

There are also a number of financial and debt advisers who may be able to help, and we’d certainly suggest searching via AdviserBook’s search function to see if there is someone local to you who can address your needs.