Hard-up Brits with mental health issues will be able to get unlimited time to pay back debts
While receiving treatment, those affected won’t have to pay further interest or charges on the debt they owe, and will not face enforcement action from debt collectors
PEOPLE with serious debt who are under the care of NHS mental health crisis teams will not have further interest and charges added to their debts for the duration of their care, under new government plans.
Yesterday, in the Budget the Chancellor announced that anyone in serious debt will get a period of 60 days, up from the six weeks that had been previously suggested.
Now, the government has also confirmed plans to extend this "breathing space" for people under the care of its new NHS crisis team.
Brits with mental health issues will be able to get unlimited time to pay back debts while their treatment is ongoing.
For this, they must be an in-patient or be receiving ongoing care for a mental health crisis.
Crucially, these applicants would not need to apply for a breathing space through a debt advice agency - and there is no limit on how many times they can apply.
Under the breathing space scheme anyone else would need to speak to a debt adviser to apply for a breathing space and not have had one in the previous 12 months.
Applicants will have to fill out a form about their debts and it will need to be classed as "problem debt".
The aim of allowing them this time is to give them a chance to get on top of problem debts before they spiral out of control.
How to get out of debt in five easy steps
WE explain how to get yourself out of debt...
- Take your head out of the sand It can be tempting to ignore the envelopes landing on the doormat but resist the urge to bury your head in the sand. Write down a list of all of your debts, the outstanding balances, the interest charged, and repayment dates for each.
- Pay off urgent debts Take time to sort out how much money you owe and how much you having coming in. If you have several debts, you need to make sure you’re dealing with the most important ones first, such as your rent or mortgage payments, gas and electricity bills, or council tax. Next, try to pay off those with the highest interest rates first.
- Cut your household bills Can you cut anything out and are your bills as cheap as they can be? Identify any unnecessary expenditures you could cut down to help reduce spending in the short term, such as pricey nights out and any subscriptions you’re not using and make sure you're shopping around and getting the best value for money when it comes to households bills.
- Make cash by selling unwanted items Either sell them on eBay (go for the ‘Buy it Now’ option as it’s new) or, if it’s big, try your local Facebook group as it’s free and you sell to people nearby who can come and pick the item up.
- Get help if you need it If you're really struggling, contact a free debt advice charity, such as StepChange, National Debtline and Citizens Advice. They can give you confidential support and advice and you should never have to pay for this.
As well as not paying any further interest or charges, those eligible will also be given the right to legal protection from creditor action while they are receiving debt advice.
The government has now published its proposals for the scheme, and it is asking for responses to be sent in by 29 January 2019.
After this, a launch date for breathing space which is likely to be in 2020, will be confirmed.
Experts welcomes the changes. Helen Undy, director of the Money and Mental Health Policy Institute, said: "That will make a huge difference in helping people avoid spiralling into serious long-term debt problems, especially those who are struggling with managing their finances because of their mental health."
Richard Lane, director of external affairs at StepChange, added: "Being able to access the debt breathing space with the minimum of bureaucracy will be very helpful for people, and we look forward to working with partner organisations and the government to ensure that the mechanisms to achieve this are workable and practical."
The introduction of a breathing space comes after widespread criticism of payday lenders who are still targeting struggling households with short-term loans at extortionate rates.
The news comes as a victory for our Stop the Credit Rip Off campaign, which has been campaigning for more help to those who are unable to repay high cost debt.
It was also announced in the Budget that the government will work with banks and leading debt charities to design a no-interest loan scheme for hard-up Brits.
The scheme will be introduced next year and it's believe it will be similar to the Australian "Good Shepherd"programme which has already helped four in five people from having to return to payday loans.
Earlier this month the city watchdog warned that millions of people may be due refunds from payday loan firms and a new tool was launched to help those affected to claim compensation.
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