Newsbeat

Problem debt: People to be given 'breathing space'

A man surrounded by bills Image copyright Getty Images

People in serious debt in England and Wales are going to be given 60 days of "breathing space" where they can't be chased up for repayments and don't have to pay interest.

Provided it's approved by Parliament - the scheme, designed to give people time to get advice, will start in 2021.

People in a mental health crisis will be given the same protection for as long as they're getting treatment.

Debt charities and experts have welcomed the announcement.

'I got trapped in a cycle'

As well as banning companies from contacting you asking for cash, the scheme also freezes interest, fees and charges.

"It would be great just to have the time to actually think about what help you need," 30-year-old Danny Cheetham tells Newsbeat.

Image caption Danny says his debts quickly spiralled out of control

After getting addicted to gambling, he ended up in over twenty thousand pounds of debt to payday loan companies.

"Every month the interest alone on my debts was nearly a thousand pounds. It grew faster than I could afford to repay it.

"So the debt just kept getting bigger and I found myself having to take out more loans to cover the debt I was already in. There was just no way of getting out of the cycle."

He says, for him, the scheme would have had two benefits.

Image copyright Danny Cheetham
Image caption Danny says losing his mum Christine in 2015 was a key moment in him deciding to tackle his gambling addiction - and get out of debt

"To have known that your interest wasn't going on a loan would have meant that you could have put some of that money against that debt and actually make a chunk of it disappear."

"On top of this - there are just so many debt organisations out there who will help you, but when you're at that point when you know your debts are growing you don't have time to think about who you should ask for help."

The government says the scheme will cover a wide range of debts include things like council tax and benefit overpayments.

"This isn't going to be a magic pill that solves debt problems," says Sara Williams from the blog Debt Camel, "but what it will do is give people space to find out what the best ways forward for them are.

"At the moment people are being pressured into making poor decisions because they're worried about the bailiffs coming round, so they can end up borrowing more money.

"And if you borrow more money to pay a bill you can't afford to pay, then the next month you've got that debt plus the interest and you haven't solved your problem at all."

Image copyright Getty Images

People using the scheme will have to get professional advice.

Sara says often this comes down to knowing which payments to prioritise.

"Your mortgage, your rent, council tax, utilities, food, clothes and transport to get to work - these things are all priorities.

"Whereas a lot of other creditors - catalogues, credit cards and loans - even though they can be really pushy, they are not priority debts."

While this scheme will only apply to England and Wales, a similar one is already in place in Scotland - although this doesn't cover mental health crises or freeze interest rates.

Northern Ireland is also looking into making changes.

Follow Newsbeat on Instagram, Facebook, Twitter and YouTube.

Listen to Newsbeat live at 12:45 and 17:45 weekdays - or listen back here.

More on this story