New ‘breathing space’ scheme will help folk struggling with debt

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, according to the Treasury.

Set to be introduced in early 2021, it is estimated that the numbers helped will increase in time to more than one million per year.

The breathing space period will see enforcement action from creditors halted and interest frozen for people with problem debt.

During the period, people will receive professional debt advice to find a long-term solution to their financial difficulties.

People receiving mental health crisis treatment will receive the same protections until their treatment is complete, the government said.

The impact assessment for breathing space, published on Time to Talk Day 2020, forecasts that the initiative will help more than 700,000 people across the UK get professional help in its first year, increasing up to 1.2 million a year by the 10th year of operation.

Of this, 25,000 to 50,000 people in mental health crisis treatment are expected to benefit from breathing space every year.

The Economic Secretary to the Treasury, John Glen, said: “Being trapped in debt can be an incredibly difficult experience, and with interest and potential enforcement action to contend with, it’s no surprise how stressful the impact 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 in early 2021 as planned, so we can level up the whole country and help millions of people to rid themselves 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.”