Struggling households to have council tax payments paused for 60 days under new scheme
STRUGGLING households will be able to pause council tax payments and other bills for 60 days under a new scheme launching next year.
First announced in June 2019, the breathing space scheme will protect hard-up Brits from bailiffs and prosecution for two months.
Affected households will also have their debts frozen, meaning no interest can be added.
The scheme won't come into force until May 4, 2021, but the Ministry of Housing, Communities & Local Government (MHCLG) yesterday asked councils to start preparing for the new guidelines.
It comes after Parliament approved the new regulations in October.
Local authorities are being warned they won't be able to share details with debt collectors and bailiffs despite missed payments by eligible Brits.
Who will be eligible for the scheme?
THE government is yet to release the full guidance, but below’s what we know so far.
To be eligible for breathing space, individuals would have to:
- Access debt advice
- Be assessed as being in problem debt by a debt adviser
- Not have entered in breathing space in the previous 12 months
The only exception is those receiving NHS mental health crisis treatment – they would be able to get breathing space anyway.
The government has defined being in "problem debt" as having difficulty paying their debts.
You also need to be in such financial difficulty that you have a realistic chance of entering an insolvency or debt management plan.
Once they get confirmation of breathing space for certain individuals, councils and other credits must also search for any extra debt owed by the same person.
This is because they may be eligible to have this added to the breathing space period too, MHCLG said in the letter.
The scheme will apply to council tax arrears and other outstanding debt, including tax, benefit overpayments as well as credit cards and loans.
It will effectively pause enforcement action from creditors and freeze charges, fees and certain interest on the debts for up to two months.
During this time, households will receive professional debt advice to find a long-term solution to their financial difficulties.
Those suffering from mental health will also receive extended support for as long as they're receiving medical help, plus a further 30-days on top.
The scheme will help over 700,000 Brits get help in its first year, according to figures released in February.
This number is then expected increase to 1.2million a year by the 10th year.
Of this, 25,000 to 50,000 people in mental health crisis treatment are also expected to benefit every year.
How to get out of debt
WHILE getting back on track can seem like a daunting task, we’ve taken a look at what you can do to help you on the way.
Don't ignore bills: Ignoring your bills won't make them go away, and the problem will likely escalate. It's best to tackle debt head on by working out exactly what you owe and when you need to pay it back.
Make a budget: Once you know what you need to pay back, it'll become easier to prioritise your finances. The next step is to create a detailed budget so you can see how much you have going in and going out. Use an online tool like one from Citizens Advice to help you do this.
Pay your most expensive credit card sooner: If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Get a balance transfer card: If you're paying interest on your credit card balance, this can ultimately add to your debt pile. A better option could be getting a 0% balance transfer card. These types of card will let you transfer an existing balance to a new card and gives you the chance to clear it fully without incurring interest. MoneySavingExpert's eligibility calculator will let you know what deals you will likely qualify for. You'll need to have a good credit rating to qualify for one.
Get help for free: There are lots of groups who can help you with your debts.
- Citizens Advice – 0800 144 8848
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
The support comes as council tax bills could rise by up to 5% next April after ministers gave the green light for hikes last month.
Meanwhile, millions of struggling households can get their council tax bills reduced by £150 this year due to the coronavirus crisis.
In February, the number of struggling people taking out individual voluntary arrangements (IVA) to help manage debts rose to an all-time high.
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