Struggling borrowers to get 'breathing space'
Consumers struggling to pay their debts will now get 30 days of 'breathing space' from debt collection agencies, the government has announced.
The Credit Service Association (CSA) has agreed to the 30-day rule, which will start once a debt adviser has been appointed and will give borrowers an opportunity to work out a repayment plan.
Consumer minister, Gareth Thomas, said: "This new 30-day rule will give people a breathing space to help them take control of their finances as well as encourage them to seek help from debt advisors."
The break for borrowers in difficulty was part of a new set of 'fair principles' agreed following a credit card summit hosted by the Department for Business in November.
The agreement will be written into the CSA's code of practice, which is used by the organisation's 300 members.
CSA members will also have to inform borrowers of the availability of accredited advisory services.
The government is keen to help consumers who are failing to keep up with their repayments during the recession and are taking several measures to protect borrowers from a lifetime of debt.
Debt Relief Orders (DROs) come into force today, which will allow people on low incomes with limited debts who could not previously afford to go bankrupt, to write off their debts and start again after a period of 12 months.
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