The Government has launched a new ‘breathing space’ initiative, designed to help those struggling with problem debts and mental health issues.
This initiative will see individuals given a 60-day breathing space, where they will be protected from enforcement action from creditors, and interest on debts will be frozen.
Those with problem debts must engage engage with professional debt advisers during this period.
However, the Government acknowledged the links between problem debt and mental health issues and has confirmed that those receiving NHS treatment for mental health crisis will not need to seek debt advice during this period.
They will continue to receive the same breathing space protections, which will last for the whole of their treatment.
This scheme will cover a broad range of debts including arrears owed to central and local government. This will mean council tax arrears, personal tax debts and benefit overpayments will be included.
As well as breathing space and the support for those in mental health crisis, the package also includes a statutory debt repayment plan for those with problem debt, which offers similar protection to the breathing space scheme, helping individuals to repay their debts over a manageable timeframe.
The plan will adjust as people’s life circumstances change, which could mean decreasing monthly payments if their disposable income has changed.
However this package of measures is not due to be introduced until 2021.
Announcing these plans, city minister John Glen said: “Problem debt can have a devastating impact of people’s lives, putting a huge burden on individuals which can lead to family breakdown, stress and mental health issues.
“No one should be stuck in an endless cycle of debt and facing the ever-looming threat of invasive debt collectors.
That’s why I’m introducing this new scheme, giving everyone access to the advice, time and support they need to both get their finances under control. and get away from the perpetual stress and worry debt can cause.”
Money and Mental Health Policy Institute chief executive Helen Undy adds: “This scheme could genuinely save lives. Everyone experiencing a mental health crisis should have the opportunity to recover free from escalating debt fees, charges and the threat of bailiffs arriving at their door.
“We are delighted that the government acted on our call to protect people from being hassled about debts while they’re receiving crisis care, and we look forward to working with ministers to put these plans in place over the coming year.”
Money Advice Trust chief executive Joanna Elson adds: “Breathing Space will provide a powerful incentive for people to seek debt advice, safe in the knowledge they will be given the time and statutory protections they need to begin to resolve their financial difficulty.
“The decision to include local authorities and other public sector creditors is particularly welcome – and means this new scheme could well be a game-changer in our efforts to tackle problem debt as a society.”