People struggling with debt across Gedling borough will now be given 60 days to get their finances back on track without debts piling up, worrying letters or enforcement action, under a new government scheme.
The scheme – knows as ‘Breathing Space’ – gives people protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. Those struggling will also receive professional debt advice to design a plan which helps to get their finances back on track.
The protections will also be available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.
Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, called the launch of the scheme ‘a major milestone’.
She said: “We are pleased to be supporting the launch of the Breathing Space scheme, which is a major milestone in improving the help available to people struggling with debt.
“Breathing Space will provide a powerful incentive for people in debt to seek free debt advice – with vital protections from interest, charges and creditor action to give people the time and space they need to begin to deal with their financial difficulty.
“Free debt advice has never been more important than in helping households to recover from the impact of Covid-19 – and Breathing Space will strengthen our ability to help people at this crucial time. We look forward to playing our role in making the scheme a success.”
John Glen, economic secretary to the Treasury, said: “We’re determined to tackle problem debt, but it is incredibly hard to get your finances back on track when your debts are piling up and you’ve got creditors at the door.
“This scheme will give people a breathing space from charges, distressing letters and bailiff visits, so they can tackle their problem debt with support from a professional debt advisor.
“And to help people going through a mental health crisis, which is too often linked to financial problems, we’re bringing in stronger protections lasting beyond the end of their crisis treatment.”
Breathing Space can be accessed by contacting a professional debt advisor, or by an approved mental health professional for someone in a mental health crisis.
Most debts will qualify for the scheme, including credit and store cards, personal and payday loans, overdrafts, utility bills, rent and mortgages arrears and government debts like tax and benefits.
Universal Credit overpayments will be included in the Breathing Space scheme from day one and Universal Credit advances and third-party deductions will be included on a phased basis as early as possible after the policy starts.
The Treasury said the scheme will also benefit creditors, with more than £400m in extra debt repayments expected in the first year of the scheme, as people are supported to get their payments back on track.
Martin Lewis, founder of MoneySavingExpert.com and the Money and Mental Health Policy Institute, added: “Debt is far more than just a financial issue. It’s a major cause of relationship breakdown, can hugely diminish people’s well-being, and sadly leaves 100,000s at risk of taking their own lives.
“That’s why Breathing Space is so important. It’s a win-win-win; for individuals who get their finances back on track, creditors who’ll recoup more cash in the long run, and the economy as there will be less financial catastrophe.”