Around four in ten of our clients surveyed for this briefing said that when they fell into financial difficulties they were initially confident that they would get back on track quickly or manage by juggling bills and credit. Instead prolonged use of credit as a coping strategy tended to deepen the hardship and stress they experienced, creating further serious and lasting harm.
Read our consultation response to HM Treasury's call for evidence
The problem with the current system
The problem is that people in England and Wales can only get a guarantee of protection from extra fees, interest and debt collection activities by entering into one of the existing statutory insolvency schemes. While insolvency schemes give vital help to people whose debt problems have already become intractable, they are not generally a suitable or accessible option for people in temporary financial difficulties who still have a good chance of bringing their debts under control given the time and support to recover.
We believe that the absence of an effective statutory ‘Breathing Space’ scheme protecting people in England, Wales and Norther Ireland before their debt problems become unmanageable is a significant public policy failure. Without that guarantee, people are not seeking help with their debts as quickly as they might and financial recovery is delayed.
Download the report now for the full picture.