People experiencing money troubles could soon benefit from up to a year's 'breathing space' from the drivers of worsening debt if new legal proposals get the go-ahead.
Speaking at an event in Parliament yesterday, MoneySavingExpert.com founder Martin Lewis gave his backing to the Families with Children and Young People in Debt (Respite) Bill, which seeks to bridge the gap in legal protection facing families and individuals struggling with debt.
The additional protections proposed in the bill include the suspension of additional interest and charges alongside collections and debt enforcement actions for up to a year, which would provide individuals with the opportunity to get their financial affairs in order.
For those who can show they're able to repay their debts at an affordable rate and within a reasonable time, the 'breathing space' could be extended beyond a year – however, this would only be accessible when recommended by a debt advice agency.
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During yesterday's parliamentary session, Martin described debt crisis as an issue of wellbeing, rather than being purely financial. He added that with a 'breathing space' scheme in place, creditors are more likely to get their money back – making it a "win-win-win" situation for people in debt, creditors and the state.
Kelly Tolhurst MP, who proposed the bill, said her main focus is on children's and families' wellbeing and mental health, while the free debt advice service StepChange claimed that so far this year it had been contacted by 600,000 people experiencing issues with debt (up from 500,000 for the whole of last year).
Back in February, StepChange joined forces with Martin in calling on the Government to fix personal debt rules after it emerged that one in five people making unsecured debt repayments had been left unable to afford food.
Research by the charity found that 20% of those in debt could not afford to eat, 15% had been unable to heat their home and 12% could not afford electricity.
Since then, the 'breathing space' bill has gained backing from the All Party Parliamentary Group on Debt and Personal Finance and also been championed by The Children's Society, The Financial Inclusion Commission and the Work and Pensions Select Committee.
Since the original deadline for the Treasury and Insolvency Service's review of the bill passed in December 2015, more than 1.1 million people have sought the help of free debt advice providers.