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Thursday, 9 February 2012

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New 30-day rule gives debtors breathing space

Published: Sunday, 5 April 2009

New rules have been introduced to give borrowers struggling to repay debts some breathing space. Under the new rules, borrowers will have 30 days after appointing an accredited debt adviser to take control of their finances.

Breathing space for households

The deal was struck between the government and the Credit Service Association (CSA), which represents more than 300 debt collection agencies.

Under the agreement, debt collection agencies will not contact debtors to pursue debts for 30 days once they have been informed that an accredited debt advisor has taken on the case. This will allow an accredited debt advisor to negotiate with creditors and the collection agency so that a plan for repaying the debt can be agreed.

Accredited debt advisers include:

Citizens' Advice Bureaux
Advice UK
The Consumer Credit Counselling Service

CSA members will also be required to inform borrowers of the availability of accredited advisory services.

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.

"I welcome the CSA's recognition that this is an important and sensible commitment to have made to borrowers."

Debt Relief Orders

Debt relief orders are another measure that come into effect on Monday 6th April.

By taking out a debt relief order people on low incomes with limited debts who could not previously afford to go bankrupt will be able to write off their debts and start again after a period of 12 months.

Gareth Thomas stressed that the orders are not an easy option for people in debt, as the insolvency will be a matter of public record and creditors will be able to apply to have the order revoked. But it will help those trapped in poverty.

Gareth Thomas added: "We want anyone in difficulty to be able to access the help they need.

"We know that many people are already struggling to stay on top of their bills and pay their debts so we are taking action to ensure consumers are in control of their finances and are treated fairly."