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Debtors may be given 'breathing space' Debtors to be given 'breathing space', government confirms
(35 minutes later)
People with problem debt may be given a six-week breathing space, under plans put forward by the government. People with problem debt could be given a six-week breathing space, the government has confirmed.
The period would exempt those affected from further interest, charges and enforcement action in order to give them a chance to seek advice. It follows pressure from rebels in the House of Lords, who had threatened to vote down the Financial Guidance and Claims Bill later on Tuesday.
The government is seeking views on the plans, which were first announced in this year's manifesto. They wanted the bill amended to include the breathing space idea.
It says that although many people manage credit successfully, millions of people are struggling with debts. But the Treasury has now confirmed that help for those in debt will now be the subject of a consultation, and will become law by 2019.
The concept had been promised in the Conservative party manifesto, and was mentioned in the Queen's Speech.
However, the rebels - led by former pensions minister Ros Altmann - still want a ban on pensions cold-calling to be included in the bill.
The Department for Work and Pensions announced in August that a ban would happen, but as yet there is no date.
It told the BBC that a bill would be brought forward "when time allows".
'Far-reaching impact'
Under the government plan, those people affected by debt would be exempted from further interest, charges and enforcement action in order to give them a chance to seek advice.
That exemption period could last up to six weeks.
The government says that causes of debt can range from the sudden loss of employment to a more gradual dependence on debt to make ends meet, with many people waiting 12 months or more before seeking help.The government says that causes of debt can range from the sudden loss of employment to a more gradual dependence on debt to make ends meet, with many people waiting 12 months or more before seeking help.
The Conservative manifesto also talked about introducing a "statutory repayment plan".
It will meet key industry representatives from charities, debt advice organisations, lenders and creditors in order to gather views. Members of the public, particularly those affected by the issue, are also being asked for their views.
Far-reaching impact
The government is aiming to have a draft bill ready by the end of next year, or by 2019 at the latest.
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.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.""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."
Campaigners have been arguing for a grace period for debtors. It will meet key industry representatives from charities, debt advice organisations, lenders and creditors in order to gather views. Members of the public, particularly those affected by the issue, are also being asked for their views.
Later on Tuesday, the House of Lords will debate the Financial Guidance and Claims bill, which it wants amended to include the breathing space now. Cold-calling
The Conservative rebels will still push for an amendment to the Financial Guidance Bill to include a ban on pension companies cold-calling consumers.
It is illegal to cold-call someone to try to sell a mortgage, but as yet not a pension.
Many people have been scammed, after being persuaded to withdraw cash from their pension and move it to unregulated investments, such as storage schemes or car-parking spaces.
"The government has talked about banning cold-calling - it's talked about protecting pensioners - but in fact it hasn't done anything yet," said Ros Altmann.
"This bill is an ideal opportunity to actually put some legislation in place that would ban cold calls."