R3 welcomes new breathing space scheme for people in debt

Chairman - R3 Southern and Thames Valley - Garry Lee
Chairman - R3 Southern and Thames Valley - Garry Lee

A new ‘breathing space’ scheme for people drowning in problem debt has come ‘not a moment too soon’, according to the R3 insolvency trade body for Dorset and Hampshire.

It has welcomed the introduction of a 60 day-grace period to allow people to get their finances back on track without receiving worrying letters or facing enforcement action.
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 also freezes penalties and interest on debts during the grace period.

As well as legal protections, anyone using the scheme will receive professional debt advice to plan the way ahead.

R3 has been among the organisations calling for such measures to support people who are unable to afford their debt repayments, to give them a chance to take stock and plan a way forward.

Garry Lee, chair of R3’s Southern & Thames Valley region, which includes Dorset and Hampshire, said: “The introduction of the breathing space scheme comes not a moment too soon.

“The pandemic has dealt a body blow to many people's incomes and savings, and this policy could make a real difference in helping individuals find the best way of resolving their financial situation.

“The scheme does a good job of balancing the needs of people in debt with the rights of their creditors, and it has been set up such that it is part of a journey, rather than a destination in and of itself.

“The breathing space scheme has the potential to help many thousands of people who have well-founded worries about their finances, and who need time and guidance to assess their position, speak to an advisor, and plot a path forward.”

Any individual using the breathing space scheme must access free debt advice from a professional, qualified and regulated source during the scheme’s duration, to decide how to address their financial situation.

They can only use the breathing space once during a 12-month period, and regular bills such as mortgage, rent, utilities and taxes should still be paid.

People receiving treatment for mental health issues can get greater help – with the breathing space lasting the length of their treatment plus another 30 days.

Garry, who is an associate director in the recovery and restructuring services department at accountancy firm Smith & Williamson’s Southampton office, added: “The first reaction of many people in debt is to panic.

“By consulting a professional they will be able to find a way forward that is best suited to their circumstances rather than feeling pressured into entering a type of debt solution purely because it is the first one they come across.”

According to the government, more than 700,000 individuals could be helped in the scheme's first year alone. It came into force on May 4.

Visit https://www.r3.org.uk/ for more details.


Bookmark and Share
All content © The Business (Dorset) Ltd www.bizmag.co.uk
Website designed and managed by WhitesandsPR www.whitesandspr.com