Breathing space for debtors

The 2017 government manifesto pledged to explore the provision of a breathing space scheme for those dealing with problem debt. Following this the government has recently issued a call for evidence to seek views on this proposal.

Problem debt has been much in the news in recent times in addition to concerns about the level of personal borrowing and the increasing numbers of those entering formal personal insolvency procedures.

The call for evidence seeks views on a breathing space scheme whereby an individual could apply for legal protection from further interest, charges and enforcement action for up to six weeks.

The government has also recently introduced a bill into parliament which aims to create a new single financial guidance body which will replace the Money Advice Service, the Pensions Advisory Service and the Department for Work and Pensions ‘Pension Wise’ service and aims to simplify the landscape for those seeking guidance.

With proper safeguards to balance the interests of creditors and debtors, these initiatives are welcomed. Many individuals who come to see us for personal insolvency advice are often unaware of the options available to them or where and how to seek advice, so clear guidelines and accessibility are key and a mechanism which gives a debtor the space to take advice and consider the best way forward would be a useful additional to existing debt procedures.

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