The North East chair of insolvency and restructuring trade body R3 has welcomed the introduction of the new ‘breathing space’ scheme which gives people with money worries a period of time free from creditor pressure in which to start tackling their money problems.
Alexandra Withers was speaking after the government’s Debt Respite Scheme, known informally as the breathing space scheme, came into effect.
Under the scheme, people will be given legal protections from their creditors for 60 days, with interest and penalty charges frozen on all debts which qualify for the scheme, and enforcement action halted.
They will also receive professional debt advice to design a plan which will help to get their finances back on track – and in recognition of the link between problem debt and mental health issues, all these protections will be available for people in mental health crisis treatment for the full duration of their treatment, plus a further 30 days.
Government figures suggest that up to 700,000 people across England and Wales could benefit in the first year of the scheme – 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 11 years, Alexandra Withers is hoping the new rules will enable more people around the region to find solutions to their financial problems that are right for their personal situations.
Alexandra Withers, who is an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, says: “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 our region.
“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 to find the best way of resolving their financial situation.
“In our view, the scheme does a good job of balancing the needs of people in debt with the rights of their creditors, and has been set up in such a way that the scheme is rightly part of a journey, rather than a destination in itself.
“The breathing space scheme has the potential to help many thousands of people across the North East who have well-founded worries about their finances in the current circumstances, and who need time and guidance to assess their position, speak to an advisor and find a path forwards.
“We hope the scheme gets good pick-up in our region, and that it provides a measure of relief and direction to all who need it.”