‘BREATHING SPACE’ FOR THOSE WITH MONEY WORRIES
A NEW 60-day “breathing space” period for those sinking into financial problems will help an estimated 700,000 people out of debt in the first year, writes Vicky Shaw.
It is set to be introduced early next year and the numbers helped will increase to 1.2 million a year by the 10th year, according to Treasury estimates.
The breathing space period will see enforcement action from creditors halted and interest frozen for people with problem debt.
In that time, people will get professional debt advice to find a long-term solution to their financial difficulties.
People with mental health problems will receive the same protections until their treatment is complete, the Government said.
The impact assessment on the website set up to promote today’s Time to Talk Day 2020, states that between 25,000 and 50,000 people being treated for a mental health crisis are expected to benefit from this breathing space every year.
Economic Secretary to the Treasury John Glen said: “Being trapped in debt can be incredibly difficult, and with interest and potential enforcement action, it’s no surprise how stressful it can be.
“Today’s figures underline just how critical it is that we roll out this policy, particularly on a day like today, where we should all work to reduce the stigma of mental health issues. That’s why we will introduce breathing space, to level up the whole country and help millions of people get rid of problem debt.”
Phil Andrew, chief executive of StepChange Debt Charity, said: “We know that debt is bad for your mental health, with all the additional stress and anxiety that it can create.
“Around two in five people who turn to us have an additional vulnerability on top of their debt – and for half of them, that vulnerability is a mental health problem.
“The good news is after debt advice, many people report improvements in their wellbeing such as being able to sleep better at night or cope better with day-to-day life.
“Breathing space will deliver much-needed additional help in two important and connected ways. It will encourage more people to seek advice, and when they do, there will be better protections in place to stop further harm and help recovery.”
As well as credit cards and loans, breathing space will apply to a wide range of Government debts.
Creditors are also expected to benefit.
More than £400million in extra repayments is expected in the first year, as people get support to get their payments back on track.