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New 30-day rule to help households take control of their finances

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2009/94) issued by COI News Distribution Service on 5 April 2009

Debt collectors have agreed with Government to give 30 days' breathing space to borrowers struggling to repay debts.

The new 30-day rule, agreed with the Credit Service Association (CSA), which represents debt collection agencies, will start once an accredited debt advisor has been appointed.

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."

Kurt Obermaier, Executive Director of the CSA, said:

"We have an agreement to allow a 30-day breathing space in the hope and expectation that this will ease the pressure on the debtor and more likely result in a positive outcome for all."

The new 30-day rule is being written into the CSA's existing code of practice which governs their 300 members.

It means that 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.

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

A break of 30 days - with a possible extension of another 30 days - to 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.

Debt Relief Orders
Consumer Affairs Minister Gareth Thomas also welcomes the news that debt relief orders will come into effect on Monday 6th April.

He said: "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."

These orders will mean 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.

This is not an easy option for people in debt - 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.

Notes to editors:

1. Accredited debt advisors include: Citizens' Advice Bureaux, Advice UK, The Consumer Credit Counselling Service

2. The announcement means a formal amendment to the Code of the CSA

3. The Credit Services Association (CSA) Limited was established in 1902 and is the only National Association in the UK for companies active in relation to unpaid credit accounts; debt recovery agencies, tracing and allied professional services

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