Debtors to be given ‘breathing space’, government confirms – BBC News

[Legal Beagles]

People with problem debt could be given a six-week breathing space, the government has confirmed.It follows pressure from rebels in the House of Lords, who had threatened to vote down the Financial Guidance and Claims Bill later on Tuesday.They wanted the bill amended to include the breathing space idea.But the…
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[PAWS]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

I have been watching this one -I agree that it doesn’t go far enough. Now in fairness and reality we must have a system that protects the creditors. HOWEVER, we must also have some legislation in force that adequately punishes those creditors and DCA’s that show a disregard to the existing legislation. How many times have we seen posters come on here asking for advice when the creditor or DCA has shown blatant disregard for the law and the alleged debtor’s rights?
These debates about new legislation are always welcome but what we urgently need is better enforcement of what already exists. If it was not for Legal Beagles how many more people would have buckled under the pressure from unscrupulous DCAs and incompetent creditors?

[Amethyst]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

Consultation here >>>>>> https://www.gov.uk/government/news/t...reathing-space



The government is seeking views as it develops a way to provide individuals in debt with up to six weeks free from further interest, charges and enforcement action. This period would give those affected time to take action by seeking financial advice about how to manage and relieve their debt burden.

Debt advice is key in helping people access a range of solutions, including informal repayment plans and debt write-off options, in order to help people get back on their feet.
The Economic Secretary to the Treasury, Stephen Barclay, said:

For many people in the UK problem debt seems impossible to escape. Its effects can be far-reaching, impacting all aspects of a person’s life and leaving them feeling helpless.
That is why we are working to give people who are overwhelmed by debt more time to seek advice, find a workable solution, and help get their lives back on track.

Although many people can and do use credit successfully to manage their personal finances, for the minority who get into difficulties this government wants to offer more support.
The new scheme could include legal protections that would shield individuals from further creditor action once a plan to repay their debts is in place.
Problem debt, where people are falling behind on their financial repayments or see their debt as a heavy burden, affects millions of people in the UK. Causes can range from the sudden loss of employment to a more gradual dependence on debt to make ends meet, with many people waiting 12 months or more before seeking help.
A six weeks’ grace period, where those suffering are safe from enforcement action and interest charges, could help give people the time and opportunity to seek debt advice.
The government is committed to getting this right and over the next twelve weeks will be meeting with key industry representatives from charities, debt advice organisations, lenders and creditors. Members of the wider public who wish to contribute, particularly those affected by this issue, are encouraged to share their views.


hint hint

[Kati]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

hint hint

oooh ... I'll definitely be doing that (and I know a few other people that would gladly share their views too!!

[Amethyst]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

Questions:

Question 1: In your opinion, how should the government decide who is eligible for a breathing space? In particular:

• How should the government define serious problem debt in the context of a breathing space?
  
  
  
  
• Should eligibility be determined by a set of defined characteristics, or should there be some discretion to determine eligibility?
  
  
  
  
• If there is some discretion, who should be tasked with exercising it – a regulated debt adviser, or some other person?
  
  
  
  
• Are there any other entry criteria and / or exemptions the government should consider?
  
  
  
  
• Who should be responsible for regulating and enforcing access to a breathing space and how can disputes be resolved?
  
  
  
  Question 2: What should be the trigger point for a breathing space? In particular:
  
  
  
  • Should a breathing space only be available for a person who seeks regulated debt advice?
  
  
  
  • Should individuals have demonstrated they have already taken steps to try to manage their debt?
  
  
  
  • If so, at what point should the six weeks start – for instance: once a breathing space has been requested, when the first advice session has occurred, or once adviser has confirmed a breathing space would be appropriate?
  
  
  
  
  

Question 3: Should all debts be eligible for a breathing space?

• How should multiple debts be treated; is there a priority order of debts which should be included as part of a breathing space arrangement?
  
  
  
  
• Should some types of debt be exempt? In particular, where the debt is the late payment of a fine or penalty?
  
• In particular, should debt owed by self-employed / microbusinesses be included?
  
  
  

Question 4: Should all interest, fees and charges be frozen throughout the breathing space period?




Question 5: What activities must the breathing space participant continue with to remain eligible? For instance:

• Should they be required to attend advice sessions?
  
  
  
• Should they be required to make any repayments during a six-week breathing space, if their financial situation allows it?
  
  
  

Question 6: Are there circumstances in which a breathing space period could end before six weeks, such as if an appropriate solution is found? Who could be responsible for enforcing this?



Question 7: Should breathing space protections only cover debts existing at the outset, or also include new debts arising during the six-week period?


Question 8: Should a breathing space be noted on a person’s credit file?



Question 9: How frequently should a debtor be able to access a breathing space, and what criteria should control the frequency of access?



There's also questions on how it would work from the creditors perspective.

[Amethyst]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

Interesting thoughts on Statutory DMP's after a breathing space ( if that hasn't resolved matters)

The following questions are centred on the period after a breathing space, when someone coming out a breathing space would be entering, or working towards entering, a future plan for dealing with their debts.

The manifesto commits the government to introduce a statutory debt repayment plan where appropriate, which would formalise existing debt management plans as a debt solution. A debt management plan can be used as a way of repaying debts. The client makes reduced payments to non-priority and/or unsecured creditors if they can’t afford the full contractual payments. These are typically set up by a debt adviser who negotiates a debt management plan with their client’s credits creditors. A debt adviser can also agree a repayment plan for priority debts using the client’s disposable income.

In Scotland, statutory ‘debt payment plans’ offered by the Debt Arrangement Scheme (DAS) are administered by the Accountant in Bankruptcy (AiB), an agency of the Scottish Government. As well as managing the DAS scheme, AiB is responsible for administering the process of personal bankruptcy and corporate insolvency, and for implementing, monitoring and reviewing Scottish government policy in these and related areas.

[PAWS]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

Oh, I have given my opinion and with some vigour but this just seems like a waste of time,
First of all: 6 weeks is not long enough for the majority of situations. In the first 6 weeks of issues you will still be dealing with the OL and to be fair most of them will cut you a bit of slack for the first month or two so this is pointless.
Secondly: They are trying to set up a very restricted blanket rule and we all know that simply cannot work as debtors’ circumstances are as individual as the amounts owed. Do you know what I mean? They are asking for it to be too specific and then should a debtor fall down on any of the specific points, criteria or conditions the DCA will jump on them. I say the DCA but of course by the time you are ‘sold off’ to a DCA and really need the government’s protection it is too late for the 6-week breathing space.

Question 7: Should breathing space protections only cover debts existing at the outset, or also include new debts arising during the six-week period?

You know these people are on a different planet! Yea like you will go on borrowing when you are up to your oxters in debt. By the time you are thinking about borrowing from Peter to pay Paul it is way over the time limit.

Should some types of debt be exempt? In particular, where the debt is the late payment of a fine or penalty?

Or a demand from HMRC or Local Council.

[Amethyst]

Re: Debtors to be given ‘breathing space’, government confirms – BBC News

The consultation has now closed so here's some links to responses that have been made public.

CAP - > https://capuk.org/connect/policy-and...l-for-evidence
Stepchange -> https://www.stepchange.org/Mediacent...sultation.aspx
MoneyAdviceTrust -> http://www.moneyadvicetrust.org/Site...on%20paper.pdf (PDF )
MSE -> https://images6.moneysavingexpert.co...167.1502272833

( I'll add more as I come across them, makes for some interesting reading )