Millions of people struggling with debt are to be given a helping hand to get out of the red.
A new 60-day breathing space period will freeze interest, fees and enforcement action for those with problem debt, to allow them to get their finances back under control.
During this time individuals will receive professional debt advice to find a long-term solution to their financial difficulties.
Set to be introduced in early 2021, it is estimated that the breathing space initiative will help 700,000 people get out of debt in the first year, rising to up to 1.2million a year by the tenth year of operation, according to the Treasury.
Economic secretary to the Treasury, John Glen, said: “Being trapped in debt can be an incredibly difficult experience, and with interest and potential enforcement action to contend with, it’s no surprise how stressful the impact can be.”
As well as covering debts like credit cards and loans, rent and energy arrears, breathing space will also cover a wide range of government debts such as council tax.
The Government also expects that creditors will benefit from the introduction of this grace period as more than £400million in extra repayments is anticipated during the first year, as people get support to get their payments back on track.
Debt charities have welcomed the news of the launch of breathing space.
Phil Andrew, chief executive of StepChange Debt Charity, said: “Breathing space will deliver much needed additional help in two important and connected ways.
"It will encourage more people to seek advice, and when they do, there will be better protections in place to stop further harm and help recovery.”
