Simon Read: Give people struggling with debt some breathing space

Struggling people need help, understanding and forbearance, not ill-thought-out pronouncements

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The Independent Online

Who worries about people struggling with debt? Not many of our patronising politicians, judging by their recent pronouncements on the issue.

That many turn to food banks is because “the poor can’t cook”, according to one particularly ill-judged pronouncement on Monday by the Tory peer Baroness Jenkin.

But benefit cuts have clearly had a disastrous effect on many. Official government figures published this week revealed that nearly a million people lost benefits in the year to April under the Coalition’s hard-line regime. Are they all lazy scroungers, as some Tories would have it? Of course not.  Most want to work and want to be able to afford to feed themselves.

But a shocking new report published this week warns that millions of people in temporary financial difficulty are at risk of falling deeper into debt.

Why? Because there’s a huge gap in the protection available, reckons the StepChange debt charity. Its report reveals inconsistency among creditors in dealing with people who ask for assistance. They should be helping struggling people by freezing interest and charges so that their debt stops mounting up, or agreeing affordable repayment terms.

They should also scrap distressing enforcement action – such as sending the bailiffs round.

In practice, StepChange warns, struggling people often get no support and in many cases feel forced to take on further borrowing, even turning to high-cost payday loans to pay back existing debts. And that, of course, leads to a spiral of debt.

The fact is, they are generally only allowed to freeze interest and charges if they become insolvent – a serious step that many people naturally want to avoid.

So the charity has proposed a new “extended breathing space” scheme where the statutory protections are extended to people with temporary financial difficulties. This would ensure that short-term economic problems, such as job loss or illness, don’t become long term difficulties.

Struggling people need help, understanding and forbearance, not ill-thought-out pronouncements. The Government, lenders and regulators  should adopt this scheme urgently, before Christmas debt becomes new year financial heartbreak.

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