Charity launches new service to give struggling debtors breathing space

17 June, 2013

StepChange Debt Charity has launched a new service to give those struggling with debt breathing space.The new token payment plan service arranges for debtors to pay their creditors one pound a month. The service is temporary and not a solution, and is aimed at people who have experienced a sudden shock to their income such as redundancy and who expect their situation to improve in the following 12 months.

The plan allows debtors to make a gesture of goodwill to their creditors. It lets them acknowledge what they owe and show that they are willing, but currently unable to pay their monthly contractual payments on their debts. Other key aspects of the token payment plan are:

• It is for unsecured debt such as credit cards and personal loans only, and not priority debt such as Council Tax or rent.
• There will be a monthly payment of one pound towards each debt, regardless of the size of the outstanding balance.
• It is intended to last for 12 months or less, but may be extended if the debtor is working to increase their income.

The charity will conduct a review at the end of the 12 month plan or before if their circumstances change, and then recommend a long term debt solution such as a debt management plan (DMP).

Commenting on the new service, Delroy Corinaldi, external affairs director at StepChange Debt Charity said: “Very few of us aren’t vulnerable to a sudden shock to our income, be it as a result of redundancy, illness, or some other change of circumstances. While this is going to have a short-term impact, the consequences don’t necessarily have to be long-term. 

“That is why we have created this short-term plan, to give people the time and space to deal with and adjust to their change of circumstances.”