Jon Cruddas MP for Dagenham and Rainham has backed calls for a new scheme to help thousands of families regain control of their finances. Data from the Bank of England shows unsecured household debt is currently rising at its fastest rate since the financial crisis.
Step change is an organisation which offers advice and money management is one of the most trusted providers of free debt advice and solutions. Problem debt causes extreme distress to individuals, and can often lead to mental ill health. The damage goes much further and can lead to the breakdown of families and has a detrimental effect on the whole community.
The rise in personal borrowing has led to mounting concern that households who get into debt need safer ways to manage financial difficulties.
Jon Cruddas has joined the calls to introduce a ‘Breathing Space’ scheme that would offer people seeking debt advice a 12-month legal protection from mounting interest, charges and enforcement action. The scheme builds on protections offered under the Debt Arrangement Scheme in Scotland which ensures that if families stick with their agreed repayment plan they are not harried or hassled.
This ‘breathing space’ can help troubled individuals and families focus on what to do next, without the worry of receiving calls from creditors demanding payments. Most companies will provide at least 30 days breathing space, which in most cases is not enough. That is why the campaign for a 12-month legal protection is so important.
Jon Cruddas MP commented: “It can't be right that children's mental health and happiness is suffering as a result of creditors unfairly escalating people’s debt problems. Families in problem debt need time and space to get back on their feet. By providing a period free from additional interest, charges and enforcement action, a new Breathing Space scheme would help families recover their financial situation and put in place a plan to affordably repay their debts.
“I’m pleased that the Breathing Space proposal has widespread cross-party support, including from the Work and Pensions Select Committee and the APPG on Debt and Personal Finance. The Government now needs to act by putting a comprehensive Breathing Space scheme in place.”