The Government will introduce a new tax on debt repayment that will be introduced in January.
The UK will also introduce a debt relief scheme to help people pay their debts.
The scheme, called Debt Relief, will allow households to pay back their debts, if they have not made repayments within the three years of the scheme starting.
It will be available to anyone over the age of 16 who owes at least £5,000 to the Government and is not eligible for other schemes.
People with household debt are also expected to pay off their debts in one lump sum, with the Government agreeing to pay a certain amount to cover their expenses.
What is debt relief?
Debt relief means that the Government will offer a small lump sum of money to a household to help them repay their debts as a debt reduction scheme.
For example, if a household owes £10,000 and does not make repayments, the Government would offer a lump sum to help pay the debt.
Debt relief can be paid by applying for the scheme online or by calling the local Debt Recovery Service.
How can I find out more about debt relief in my area?
For more information about debt recovery schemes, visit the Government’s website.
Why is the UK taking part in the scheme?
The UK Government has decided to join the UK’s international campaign to help debt-laden households pay down their debts by providing a new scheme to pay debt relief, and to help millions of people avoid paying more interest.
In a letter to parliament on Wednesday, Chancellor Philip Hammond said that he wanted to make sure that people have the ability to pay their debt with interest.
“The Government is committed to helping people to make repayings on their debts with interest free loans,” Mr Hammond said.
“We have also worked with the Financial Conduct Authority to ensure that those borrowers who cannot afford to repay their loans are offered a loan of up to a maximum of 5% of the debt amount, and those borrowers whose debt does not rise in value or who do not pay their loans in full within the term of the loan, can receive a lower interest rate for the remaining amount.”
What are the main differences between debt relief and other debt relief schemes?
There are four main differences with debt relief: The new scheme will be a debt payment plan rather than a debt settlement scheme, meaning it will be more targeted to those with more difficult financial circumstances.
Under the existing scheme, those who cannot pay their bills due to a medical condition, or are under an employment protection order or are on public assistance, are excluded from the scheme.
The new scheme also excludes people who have been in arrears on their loans for more than six months.
However, borrowers will be able to apply for an extension to the scheme if they meet certain criteria, and can request an extension if they are in arresse.
Borrowers who are able to pay are expected to complete an assessment on the debt, and report back to the Debt Recovery Scheme if they can not repay the debt within six months of being offered a new loan.
A debt relief loan will be paid for up to 10 years.
“We will offer this new scheme in partnership with the FCA to enable those people who cannot make repayable payments, or who have outstanding debts, to pay them back in full over the five-year repayment period,” Mr Griffith said.
More on debt relief Read more about UK debt relief from the Treasury Read the latest news on debt forgiveness