MSE News: Government urged to give those in debt crisis 'breathing space' to buy food 3 February 2016 at 6:07PM edited 3 February 2016 at 6:12PM in Debt-free wannabe 11 replies 2K views

MSE_Luke

MoneySavingExpert founder Martin Lewis and debt charity StepChange have called on the Government to fix the rules for people struggling with temporary debt...

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'Give those in debt crisis 'breathing space' to buy food, Martin Lewis and Stepchange urge Government'

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sourcrates

An excellent common sense idea.

Lots of people new to debt problems, come on this forum for advice, some of whom have run out of money for food, but are still paying creditors there unsecured debts !!!!

This is madness, most have never missed a payment, and are scared stiff to do so, they expect bailiffs to be knocking on there door for missing a payment on a credit card, which of course, is not going to happen.

Six months grace would give people a chance to sort through there available options, decide on a plan of action, save an emergency fund etc etc, the current 30 day grace period is not long enough, as it's just not long enough to sort out complicated cases.

boo_star

sourcrates wrote: »

An excellent common sense idea.

Lots of people new to debt problems, come on this forum for advice, some of whom have run out of money for food, but are still paying creditors there unsecured debts !!!!

This is madness, most have never missed a payment, and are scared stiff to do so, they expect bailiffs to be knocking on there door for missing a payment on a credit card, which of course, is not going to happen.

Six months grace would give people a chance to sort through there available options, decide on a plan of action, save an emergency fund etc etc, the current 30 day grace period is not long enough, as it's just not long enough to sort out complicated cases.

I think we need wider awareness of what debt collectors can/cannot do combined with much harsher punishment for those who deliberately, sorry, "accidentally" mislead debtors rather than this.

It's something, sure, but it's a band-aid fix.

Anthorn

I have very great sympathy with those who are in debt through no real fault of their own. But the big problem is that debt is often a result of living beyond means, of sqandering on luxuries, of spending just because they can.

By all means let us help those innocent victims of debt such as the children. If we are to help the debtors themselves why stop at food? Why not free car finance, free mortgages and free rents and free energy: Those who get themselves into debt get a free home, free energy, a free car and free food. Doesn't sound very good does it?

Lastly, I'm no stranger to debt. Been there, done that, got the badge, the tee shirt and the diploma. It took me 6 years to get out of debt but I did it and I do not see why anyone else cannot do the same - without hand-outs!

sourcrates

Anthorn wrote: »

I have very great sympathy with those who are in debt through no real fault of their own. But the big problem is that debt is often a result of living beyond means, of sqandering on luxuries, of spending just because they can.

By all means let us help those innocent victims of debt such as the children. If we are to help the debtors themselves why stop at food? Why not free car finance, free mortgages and free rents and free energy: Those who get themselves into debt get a free home, free energy, a free car and free food. Doesn't sound very good does it?

Lastly, I'm no stranger to debt. Been there, done that, got the badge, the tee shirt and the diploma. It took me 6 years to get out of debt but I did it and I do not see why anyone else cannot do the same - without hand-outs!

I think you mis-understand the post.

It's not about giving anyone anything for free.

Its about giving debtors 6 months grace from further creditor action, so they can get there financies back in some kind of order, before taking steps to deal with there debt problem

This is because many people wrongly prioritise paying debts above budgeting for food.

Something no one should have to do.

jaydeeuk1

I've always thought a better solution would be have some sort of govt scheme where an individual can take a type of loan exactly equal to their unsecured debt from the govt at 1% above inflation, but the govt themselves pay off the individuals debt rather than money going in to that persons account. Repayment something like min 0.5% a month and either comes directly out of wages, pension or benefits and can't be included in bankruptcy. Also make it so that individual cannot take out credit until the loan is paid back and perhaps gone on sort of finance or family budgeting course.

Make it so banks and payday loan companies have to contribute a certain amount to the scheme, very little risk to tax payer, less use of courts for bankruptcy hearings, a much cheaper and better alternative to payday loans and free financial advice too.

Probably goes against EU law or something, but there's an idea there somewhere.

gawebb99

sourcrates wrote: »

I think you mis-understand the post.

It's not about giving anyone anything for free.

Its about giving debtors 6 months grace from further creditor action, so they can get there financies back in some kind of order, before taking steps to deal with there debt problem

This is because many people wrongly prioritise paying debts above budgeting for food.

Something no one should have to do.

This was me last month , we had no money for food as was too scared to miss a payment on unsecured debts .

MrHockallz

As a debt advisor myself at StepChange I would love to see this put in place, I seem to have a conversation with people prioritising debt over living costs on a daily basis.

The sense of relief my clients get when you tell them about a 30 day grace period is tangible but I know not all creditors will agree to this and I could only imagine the hope a six month government backed hold would give so many of the needy.

Thumbs up from me.

KirstyO

I was sent questions from Stepchange when they were doing the research on this, and it made me so thankful that when I was in debt the most I worked for a supermarket where I got 10% off all of my shopping, so it was much easier for me to carry on buying food, as I could get 10% off even the cheapest of food which made a big difference to me even though in the grand scheme of things the monetary value of that discount was very small. I was in a position where even though my food budget became very small and my diet changed completely, I was still able to eat two or three times a day (I'm not very good at breakfast!).


The biggest difference for me was having to take the car off the road for about 5 months. Again a small sacrifice in the wider world, and I was walking distance to town and to work so absolutely not the end of the world, but difficult when you're used to having it.


I think there should be some government backed breathing space, maybe not everybody needs 6 months, but I think it would be reassuring to know that it's there. I think its also good that its on a referral scheme, although I wonder what scope there would be for people to be referred if they wanted to self manage their debts? I know a lot of people don't contact debt charities for a whole host of reasons, including wanting to retain control of the contact with creditors.

kindofagilr

I def think this is a good idea, when it all came crashing down on us the end of 2014, we had a few months of credit payments bouncing and being charged for it while I was trying to sort our budget out.

Had this been in place it would have given us time to get the budget sorted and the payments back on track.

We are managing now though which is good

jchrispin

I think that there should be a ruling, that when someone enters a DMP, the account is looked at as to how much has been spent, how much has been paid and how much interest has been added over the life of the card and that interest off set against the debt or at least reduced by the repayments made. Obviously, this should only apply once or people would just carry on running up debts. I also think there should be a cap on interest in cards. I get annoyed when I hear of businesses making a loss on last year profits but have still made £15billion in profits. I know they are running businesses but we all have an opinion.

If I had a big lottery win, I'd like to buy a load of debts and then write to the owners of the debt telling them it's all clear and to gave a nice life and stop running up debts!