Charity calls for breathing space to apply to public sector creditors
The Money Advice Trust has urged the government to include public sector creditors in plans to introduce statutory debtor breathing space.
The Treasury has this week (October 24) launched a call for evidence on a proposal, mentioned in its election manifesto earlier this year, to introduce a breathing space of up to six weeks for people struggling with serious debt.
The breathing space would include a period of legal protection from further interest, charges and enforcement action. The full consultation document can be found on the Treasury’s website.
Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: “This is good news for people in debt. Many banks and credit card companies already offer ‘breathing space’ by freezing interest and charges as a matter of good practice, but a statutory scheme will extend this significantly. If implemented properly, this could be a powerful incentive for people to seek debt advice.
“It is crucial, however, that the government ensures that its breathing space scheme applies to public sector creditors, such as local authorities and HMRC, as well as private sector lenders. Making sure all creditors play by the same rules is in the best interests of people in debt.”
Mike O’Connor, chief executive of StepChange Debt Charity said: “We welcome the government’s move to fulfil its manifesto commitment. Personal debt is growing, and we know that the guarantee of protection provided within a breathing space scheme is crucial to helping people who are overwhelmed by debt to recover control of their finances and move on with their lives.
“The government is asking the right sort of questions, including noting the importance that their own debts could be within any scheme. But we know from the experiences of our clients that continuous protection between the initial breathing space period and any statutory repayment plan is vital. Any interruption would destabilise fragile family finances and risk putting people back to square one.”