Families struggling with mountains of personal debt urgently need a “breathing space” to regain control of their finances.
Makerfield MP Yvonne Fovargue spoke out after Bank of England data showed debts on personal credit cards and loans are rising at the fastest rate since before the financial crash.
Ms Fovargue, who chairs the all-party group on personal debt and finance in Westminster, says the stats show the urgent need for a scheme which she has led the calls for.
The proposal would give those families willing to seek debt advice 12 months of legal protection from aggressive action by creditors and enforcement action. The idea would also roll out nationwide a scheme currently working in Scotland which frees people who have worked out a repayment plan with creditors being hassled for money for the duration of it.
Ms Fovargue said: “Total household debt has now risen to record levels. While prices are rising, earnings are still below where they were before the financial crash and people are struggling to make ends meet. A statutory Breathing Space scheme is therefore vital if we are to prevent thousands of people from falling into a downward spiral of increasing debt.
A statutory Breathing Space scheme is vital if we are to prevent thousands of people falling into a downward spiral of increasing debtYvonne Fovargue MP
“I was very pleased when in 2015 the coalition government agreed to consult on the idea of introducing such a scheme, and felt that this owed something to my campaigning work and that of the All-Party Group. Since then I have written to ministers on a number of occasions calling for the proposals to be brought forward and have tabled parliamentary questions along the same lines. So far I have not received a satisfactory reply and we are yet to see a consultation document or the details of any proposal, which is frustrating.”
The Bank of England says personal unsecured debt rose by 10.8 per cent in the year up to November 2016: the fastest rate of growth seen since before 2006.
Ms Fovargue said debt often strikes when folk experience sudden changes in circumstances like job loss or illness, then face aggressive action from creditors and pressure to repay debts at unaffordable rates, cutting back on essentials and taking out other expensive loans or falling further behind with bills.