A Burton insolvency expert has backed Government plans to allow people struggling with debts a vital six-week breathing space to get their finances in order.
The proposals will give cash-strapped people protection from further interest, charges and enforcement action while they seek solutions to their financial problems.
The six-week moratorium will allow people the chance to seek further consultation and advice on how to turn their situation around by setting up repayment schemes while interest payments and new charges on debt are frozen.
Martin Smith, an insolvency expert from Dains Accountants in First Avenue, Burton said the new breathing space scheme - which is aimed to become law by 2019 - could give people the time necessary to resolve their debts.
Mr Smith said: "A breathing space is an opportunity for people to access the impartial, unpressured advice they need about their finances and the options they have for resolving their debts at a crucial time.
"Too often, people can't access the right advice or can be pressured to take action before receiving advice, and they can end up in a debt solution inappropriate for their needs, which only makes their financial problems worse.
"While any breathing space should be seen as a last chance to seek help and must find a balance between the person in debt and their creditors, introducing such an option would benefit both parties.
"If people find it easier to access a debt solution that suits their situation, they can repay more money to creditors and get back on their feet much more quickly, no longer burdened by debt.
"Money problems can hit anyone at any time for many different reasons, and taking steps towards controlling your spending and debt levels, rather than putting your head in the sand in the hope that your problems will go away, will maximise your chances of putting things right in the shortest possible time."
Citizens Advice, an independent advice charity which assists people with money problems have also welcomed the move.
The charity reported in August that one in five people in the UK struggling with credit card debts had their credit limits increased without their request and proper affordability checks.
Gillian Guy, the chief executive of Citizens Advice, said: "It's good to see the government taking action on problem debt – an issue we help thousands of people with every week.
"Providing breathing space is one way to help people get back on track, but action must be taken to stop them getting in problem debt in the first place.
"That's why we're calling for an end to irresponsible lending from credit card companies. For example, no one should have their credit limit raised without them requesting it – something which risks pushing them further into debt.
"With prices rising faster than wages, household finances are increasingly stretched. The FCA should step in to protect borrowers by banning credit card companies from automatically raising credit card limits and making lenders support customers who are starting to struggle."
What to do if you are in debt
Whenever you owe people money, you should always try and set up an arrangement to pay this back, with your options dependent on the amount of money owed and what assets you possess.
Debts can be paid in instalments through three different methods, either by setting up a debt management plan, which is an agreement with whoever you owe money and is managed by a financial company.
Alternatively, an administration order can be set up by a High Court judgement against you, for debts lower than £5,000. Lastly, an individual voluntary arrangement can be set up which will be managed by an insolvency practitioner.
Should a situation occur where you cannot pay a debt because you don't have enough money or assets to sell, a debt relief order can be set up, which is if you owe less than £20,000 and stops those who you owe money to from taking money without the court’s permission, and typically sees you freed from the debts after 12 months.
Or you can go through bankruptcy, if you owe somebody at least £5,000. Should a bankruptcy claim be successful, your debts are paid, and you are left with certain household goods and a reasonable amount of money to live on.
Bankruptcy is normally seen as a last option, and must be applied for online at a charge of £680.
How to avoid debt at Christmas
As the festive period rolls around, it can be very easy to get carried away with spending whether you are buying an extra gift for a loved one, just one more decoration for the tree or an extra-special dessert for after Christmas dinner.
It’s important to remember that magical as Christmas is, when you look at the bill in January, it might feel less so.
So, to avoid getting in debt during the Christmas period, here are some easy to remember tips.
Always plan in advance and budget your money correctly, remember rent or mortgage payments, bills and food shopping on top of your Christmas expenses.
Never go for the first option when buying in shops, remember what you are after and the price it is being sold at, then shop around, at this time of year many retailers stock the same product at varying prices.
Constantly ask yourself 'can I afford this?', cut out as many unessential buys as possible so those essential gifts and ornaments can be bought without guilt.
It is always worth a check with the authorities if you are claiming all the benefits you are entitled to.
Make sure you have a contingency fund set up. Even the smallest amount of money set aside in case of emergencies can make a difference if you need it.
Understand that there is never a problem with saying 'no', whether it’s a night out, with drink you can’t afford, or pitching in for a group present, if you don't think you can afford something, don't feel pressured into paying.