The government’s economic secretary has given his backing to a new short-term payment plan for households that have accumulated debt during the pandemic.
The Covid Payment Plan (CVPP), an initiative from debt charity StepChange, will launch in mid-November and is designed to give people more time to resume full repayments on debt they have incurred.
John Glen MP, economic secretary to the Treasury, has hailed the CVPP for having the potential to reduce the long-term financial impacts coronavirus will have on peoples’ lives.
"It’s important that people who are struggling with a temporary hit to their finances can access tailored support and so I welcome StepChange’s Covid Payment Plan, which will help people get back on to a stable financial footing in a shorter time frame,” said Glen.
The CVPP provides people with a year-long window to make reduced repayments, granting them a gradual transition to full repayments.
StepChange will be informing clients that any reduced payments will last for the period that clients are managing on a reduced income, up to a maximum of 12 months, though the charity said the plan isn’t suitable if clients currently have a county court judgment (CCJ) or decree.
Currently, StepChange estimates two million people are in financial difficulty as a result of the pandemic and cannot meet their full contractual commitments.
Phil Andrew, chief executive of StepChange. said: “What’s driven our approach is the recognition that, within our own toolbox, most of the existing solutions that we could provide are long-term strategies to enable people to tackle entrenched problem debt – they were not designed to cope with the short, sharp, temporary debt shock that so many people have uniquely experienced due to the pandemic.
"We hope that the CVPP will make a valuable contribution to the transition to recovery, both for households and for the wider economy.”
The CVPP will be supported by the Money and Pension Service which will signpost eligible customers to it, via its online Money Navigator assessment tool.