Hundreds of people across the North East may soon have a better chance of solving their money problems after the Government announced a plan to introduce a new ‘breathing space’ which will allow those struggling with debts extra time to get their finances in order.
That’s the view of North East debt expert Neil Harrold, regional chair of insolvency and restructuring trade body R3, after the Treasury confirmed that help for those in debt will now be the subject of a consultation, and will then become law by 2019.
The new ‘breathing space’ proposals, which R3 has been advocating for several years, will prescribe that those people affected by debt would be exempted from further interest, charges and enforcement action for a period of up to six weeks in order to give them a chance to seek advice.
And with North East England having had the highest rate of personal insolvency of any part of England and Wales in each of the last nine years, Neil Harrold, who is a partner with Hay & Kilner Law Firm, is hoping that this move will enable more people around the region to find solutions to their financial problems that are appropriate for their situation.
He says: “Government action to bring in a long-promised breathing space for people in debt is very welcome, and could make a big difference to the financial fortunes of hundreds of people across our region.
“The North East has a particularly stubborn problem with personal debt levels for a range of reasons – insolvency rates are typically highest on the coast and in places where major industries have declined, and these are both factors which are having a significant impact on the region.”
The Insolvency Service’s most recent annual figures revealed that there were 25.3 individual insolvencies per 10,000 people in the North East in 2016, which are comprised of bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs), a figure which is over 25% higher than the rate (19.7) across England and Wales as a whole.
Recent research by R3 and ComRes also showed almost two-fifths (39%) of North East adults are worried about their personal financial situation, and more than one in five (22%) of them think their personal financial situation will worsen in the next six months, compared to fewer than one in six (15%) who believe it will improve in the same period.
One fifth (21%) of North East adults also said they didn’t currently have any savings to fall back on should the need arise, while two fifths (40%) said they sometimes or often struggled to make their money last until their next payday.
Neil Harrold continues: “A breathing space is an opportunity for people to access the impartial, unpressured advice they need about their finances and the options they have for resolving their debts at a crucial time. Too often, people can’t access the right advice or can be pressured to take action before receiving advice, and they can end up in a debt solution inappropriate for their needs, which only makes their debt problems worse.
“While any breathing space should be seen a last chance to seek help and must find a balance between the person in debt and their creditors, introducing such an option would benefit both parties – If people find it easier to access a debt solution that suits their situation, they can repay more money to creditors and get back on their feet much more quickly, no longer burdened by debt.
“Money problems can hit anyone at any time for many different reasons, and taking steps towards controlling your spending and debt levels, rather than putting your head in the sand in the hope that your problems will go away, will maximise your chances of putting things right in the shortest possible time.”