IRRV Alert - week ending 24th March 2017
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Breathing space for debtors?
House of Commons Library
Breathing space for individuals in debt
A number of debt charities are calling on the Government to give all individuals in debt a "breathing space" in which interest, charges and enforcement action are stopped for those seeking regulated debt advice. This Commons briefing paper provides background information on the issue, including the findings of the recent independent "Review of the Money Advice Service". It also considers the Scottish Debt Arrangement Scheme, which does offer debtors a short breathing space, and is often held out as an example that could be followed (with modification) in England and Wales.
Jump to full report >>A number of debt charities are calling on the Government to give all individual debtors a “breathing space” in which interest, charges and enforcement action are stopped for those seeking regulated debt advice. It is argued that where people in financial difficulty "do the right thing" and engage with their creditors, make affordable offers of payment and maintain regular payments, they should be protected from further debt enforcement. The current Scottish "Debt Arrangement Scheme", which does offer debtors a short breathing space, is often held out as an example of the type of scheme that might be introduced in England and Wales.
Currently, even where a formal Debt Management Plan (DMP) is in place, there is no guarantee that creditors will accept the offers made or freeze interest and charges. In fact, there is no protection against any creditor who forms part of the plan from undermining its effectiveness by taking further action, usually by issuing a claim in the county court. This protection is only available if people enter into a formal debt or insolvency procedure, such as: an Individual Voluntary Arrangement (IVA); administration order; a debt relief order; or bankruptcy.
This Commons briefing paper provides background information on the issue, including the findings of the independent "Review of the Money Advice Service", published in March 2015.
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