New Government Scheme introduced to tackle problem debt
The Government has introduced a new scheme called Breathing Space to help those experiencing problem debt.
The scheme will provide those experiencing problem debt with 60 days to get their finances back on track without the threat of further debt, letters or enforcement action. They will be supported with professional debt advice, with additional support and protection for those experiencing mental health crisis treatment.
The scheme is expected to support around 700,000 people who are struggling with this issue and may impact on the Set Aside process in almshouses. A Set Aside is likely to be paused while a resident makes use of the scheme, hopefully allowing a resident to get help with their finances so that they may begin to pay back any overdue Weekly Maintenance Contribution and get back to paying on time. The Almshouse Association would recommend that members look into the scheme and consider whether residents currently struggling to pay their WMC may benefit from making use of it.
Additional points to note:
- Most debts will qualify for a breathing space, including credit and store cards; personal and payday loans; overdrafts; utility bills, rent and mortgages arrears; and government debts like tax and benefits.
- Although interest and fees are frozen, a Breathing Space is not a payment holiday. People entering a Breathing Space will need to keep paying for any debts and ongoing liabilities they have – like their mortgage, rent and bills – whilst they work with a debt advisor to find a sustainable debt solution. If someone in a standard Breathing Space fails to comply with these obligations, then a debt adviser has the discretion to cancel their Breathing Space.
Posted 10 May 21