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Breathing space for those in debt

In a recent news story published to the Government website it was announced that a new breathing space period will freeze interest, fees and enforcement for people in problem debt, with further protections for those in mental health crisis treatment.

The article is reproduced below:

Millions of people with problem debt, including those facing mental health problems, will be helped by the government to get their finances under control, new figures released on Time to Talk Day (Thursday 6 February) show.

A 60-day breathing space period will see enforcement action from creditors halted and interest frozen for people with problem debt. During this period, individuals will receive professional debt advice to find a long-term solution to their financial difficulties.

As well as this, those receiving mental health crisis treatment will receive the same protections until their treatment is complete, in acknowledgement of the clear impact problem debt can have on wellbeing.

The impact assessment for breathing space, published today, forecasts that it will help over 700,000 people across the UK get professional help in its first year, increasing up to 1.2 million a year by the tenth 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.

As well as covering debts like credit cards and loans, breathing space will cover a wide range of government debts.

Creditors will also benefit from introducing breathing space, with over £400 million in extra repayments expected in the first year, as individuals get the support they need to get their payments back on track.

The announcement builds on previous government work to alleviate the impact of problem debt, including reforming regulation around consumer credit, widening access to professional debt advice and helping build individual financial resilience.