An East Midlands insolvency expert is calling on the government to give financially distressed individuals a 28-day ‘breathing space’ from creditor action as a final opportunity to receive professional debt advice.
According to Richard Philpott, Chairman of insolvency trade body R3’s Midlands branch and a partner at KPMG in Leicester, the insolvency profession is greatly concerned that panic about creditor action can lead indebted individuals to enter an inappropriate debt solution.
He said: “During the 28-day Breathing Space, the individual would be required to seek advice to create a plan for dealing with their debts. In return, no creditor action would be possible, and repayments, interest and charges would be frozen.
“People need time, without pressure from creditors, to seek professional advice on the most appropriate course of action. If someone can make a considered decision, it can increase the chances of a better deal for the debtor and, just as importantly, a better deal for the creditor.”
Philpott added: “There needs to be a balance between the indebted individual, who should be allowed to rehabilitate themselves financially as quickly as possible, and creditors, who should receive the best repayment outcome in the circumstances.
“The Breathing Space initiative is intended to help debtors get the right advice and enter a suitable debt solution; it is not a tool for avoiding repaying debts. It should be seen as a last resort for those who have already received numerous notices of debt collection and enforcement, providing a final opportunity to tackle financial difficulties.”