Debt Relief

Problem debt is often difficult to escape and can have a devastating impact on existing issues including family problems and poor mental health. It is only right that people who fall into problem debt are helped to find a sustainable, long-lasting plan to solve their debt problems. That is why I welcome the action being taken to protect those who find themselves in problem debt through a new breathing space scheme.


This scheme will have two parts; a breathing space period and a statutory debt repayment plan. Together, these two aspects of the scheme will protect debtors from creditor action, help them get professional advice on their debt problems, and help them pay off their debts in a sustainable way. Colleagues in the Treasury have already started work on this scheme by investing an additional £12.5 million throughout 2020-21 in order to implement breathing spaces as soon as possible.


The breathing space will provide debtors with a 60-day period in which interest and charges on their debts are frozen and enforcement action from creditors is paused. During this time, debtors will have to seek professional debt advice to find a sustainable solution, encouraging them to seek advice earlier and give them the headspace to identify the right debt solution for them. The statutory debt repayment plan is a new debt solution that will extend the breathing space protections to debtors who commit to fully repaying their debts in a manageable timeline.


On the wider issue of helping those who find themselves in problem debt, I am glad that an extra £37.8 million support package has been made available to debt advice providers this year and the government-commissioned Money Advice Service is spending over £56 million to provide debt advice to over half a million people in the same period.


Debt Relief Orders (DROs) are valuable tools which provide relief to those with low levels of unmanageable debt, limited assets and minimal surplus income. A DRO is designed to be an easily accessible means of managing debt, delivered in partnership with the professional debt advice sector to protect people from creditor action. After 12 months, all debt within the order is written off.


I welcome Government plans to increase the financial eligibility criteria for DROs to ensure that vulnerable people are helped in getting to grips with problem debt. I know my ministerial colleagues are committed to ensuring that this help reaches as many people as possible and I will continue to engage with them on this matter.


Updated - 02.03.21