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Two months of 'breathing space' for those in problem debt from 2021

Two months of 'breathing space' for those in problem debt from 2021

People struggling with serious debt are to be given a grace period of 60 days before being hit with further interest, charges and enforcement action, under new rules that will come into force in 2021.

The Government has today confirmed that a 60-day 'breathing space' period will be introduced to give those in serious debt – typically defined as falling seriously behind on payments or having utilities disconnected in the past year – time to get advice and sort their finances.

Plans for a six-week 'breathing space' period were originally announced in October 2017, and in last year's Budget, Chancellor Philip Hammond unveiled plans to extend this to two months.

MoneySavingExpert.com founder Martin Lewis has long campaigned for the Government to introduce 'breathing space' for debt sufferers.

See our free Mental Health & Debt booklet for more information on where to get help.

How will the 'breathing space' work?

The idea behind the 'breathing space' scheme – sometimes known as a debt respite scheme – is to give people in problem debt a fixed period without fees, charges, interest or enforcement action, to allow them time to get on top of debts before they spiral out of control.

During this time individuals must engage with professional debt advisers, so they can find a long-term solution to their debts and get back on track with payments.

The Government has said that individuals receiving NHS treatment for mental health crisis will not need to seek debt advice during the 60-day period.

'This scheme could save lives'

Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: "This scheme could genuinely save lives. Everyone experiencing a mental health crisis should have the opportunity to recover free from escalating debt fees, charges and the threat of bailiffs arriving at their door.

"We are delighted that the Government acted on our call to protect people from being hassled about debts while they're receiving crisis care, and we look forward to working with ministers to put these plans in place over the coming year."