Stephen Barclay, economic secretary to the Treasury, 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.’

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.

The government will be meeting with key industry representatives from charities, debt advice organisations, lenders and creditors over the course of the 12-week consultation, and is also encouraging members of the wider public to contribute their views.

The call for evidence covers how to access and then enter a six-week breathing space; how a breathing space could work for creditors and debtors; and how to best design a statutory debt management plan.

One possible option is a similar incentive to the Scottish debt arrangement scheme (DAS), under which people in debt entering into repayment plans have a statutory right to have their fees and interest frozen.

Consultation questions include how the government should define serious problem debt; whether eligibility should be determined by a set of defined characteristics; how a breathing space scheme could interact with the repayment of priority debts; whether people entering the scheme should be directed to advice sessions; whether they should make any repayments during the ‘breathing space’; what happens to fresh debt; and the position of creditors. ’

 The deadline for comments is 16 January 2018.

Open consultation Breathing space: call for evidence is here: https://www.gov.uk/government/consultations/breathing-space-call-for-evi...

Report by Pat Sweet