Problem debtors could receive “six weeks’ breathing space”

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Problem debtors could be given six-weeks’ breathing space under new proposals suggested by the House of Lords.

The Government said it was launching a consultation – to run until January – on how the scheme could work and in what circumstances.

Recent figures revealed that unsecured credit, which includes borrowing through credit cards, overdrafts, and car loans, has topped £200 billion for the first time since the financial crisis.

The Bank of England said the level at which that figure is growing is unsustainable for both consumers and lenders.

Under the new plans, people suffering from problem debt could be made exempt from further interest, charges, and enforcement action for up to six weeks.

This period is designed to give those affected the time to seek financial advice on how to manage and resolve their debt.

The Economic Secretary to the Treasury, Stephen Barclay, 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.

“Although many people can and do use credit successfully to manage their personal finances, for the minority who get into difficulties this government wants to offer more support.

“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.”

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