Government may force lenders to give six-week breathing space to those in debt BEFORE charges are upped
Borrowers would face no extra interest charges or fees under the plans to allow them to deal with their debts
THOSE in serious debt could be given a six-week grace period to help them get back on track, under new plans being considered by the Government.
It said people with significant money difficulties could be given "breathing space" from their bills by having up to six weeks free from incurring further interest and charges on their debts.
The period would give people the time to look for advice and try and find solution to lower their debt burden, it added.
Any potential enforcement action would also be barred during the six weeks.
There are increasing concerns many Brits are struggling to make ends meet and relying on credit and borrowing to cover their monthly outgoings.
Earlier this month, watchdog the Financial Conduct Authority warned five million consumers are finding it difficult to pay their credit card bills.
It also found millions of households would struggle to cope with a mortgage or rent increase of just £50.
The Bank of England has also asked the banks to set aside an extra £10billion to cover losses from people who can't afford to pay their credit card bills or car loans.
Stephen Barclay, economic secretary to the Treasury, 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."
The move was welcomed by debt charity StepChange.
IN THE RED CREDIT CARD LENDERS ACCUSED OF PUSHING VULNERABLE CUSTOMERS DEEPER INTO DEBT
Chief exec Mike O'Connor said: "Personal debt is growing, and we know that the guarantee of protection provided within a breathing space scheme is crucial to helping people who are overwhelmed by debt to recover control of their finances and move on with their lives."
The consultation about the plans - which were first announced in this year's Tory manifesto - will run until January 2018, with the Government hoping to publish draft legislation no later than 2019.
It isn't yet known at what level of debt the grace period would kick in.
How to get out of debt in 5 easy steps
MILLIONS rely on credit but there are ways to get rid of debt. We explain.
- Take your head out of the sand It can be extremely tempting to ignore those envelopes that land on the doormat but resist the urge to bury your head in the sand. Write down a list of all of your debts, together with the outstanding balances 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. When you have more than one debt, 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.
- Cut your household bills Can you cut anything out, and are your bills as cheap as they can be? Identify any unnecessary expenditures that you could cut down to help reduce spending in the short term, such as your morning cappuccino, or any subscriptions that you’re not using.
- 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 You don't have to pay if you need help with debt. Get FREE advice from charities, such as StepChange, National Debtline and Citizens Advice.
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