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Breathing space schemes are no longer enough to help people out of debt

With the cost of living still sky high, savings are being eroded and debt is piling up. Local authorities with equally stretched budgets are also facing rising levels of arrears. Signposting residents to ‘breathing space’ schemes is only one part of the solution. For both citizens and councils, we believe that taking a holistic approach can offer the best possible results.

Rising levels of debt

In 2021, the ‘breathing space’ debt respite scheme was a welcome addition to government support. By preventing creditors from chasing or enforcing debt for 60 days, people have time to arrange for manageable repayments without racking up interest or charges.

However, the cost of living crisis has caused debt levels to surge, to the extent that councils are seeing more people in employment apply for emergency welfare support.

Council tax arrears also reached record levels this year, adding to the pressure on local authority finances. Working alongside our customers, NEC has developed a range of solutions to help maximise revenue while supporting communities.

Offering support sooner

Debt is a sensitive subject, which means people can be embarrassed to ask for help and avoid tackling the issue until they hit a crisis. Our Citizen Access – Special Payment Arrangements (CA-SPA) software makes it easy for residents in debt to set up their own payment arrangements online. As well as avoiding the need to explain the reasons for the debt, the simple forms take the pressure off recovery staff too. By automatically approving arrangements that are in line with council policies – for example a minimum payment amount or a maximum term – teams can focus on cases that require more specialist action.

The forms are customisable to keep them familiar and also encourage residents to sign up for direct debits, eBilling and SMS, so you can send timely, automated reminders to help secure future revenue.

Tackling a growing problem

Debts are now rising for people in work as well as those in receipt of benefits. This means authorities are increasingly dealing with people with low levels of awareness around the support that’s already available.

Our Entitlement Services team offers a proactive arrears prevention service. We use data on financial vulnerability to understand who may be at risk and reach out with a helping hand, for example to check eligibility for available discounts and exemptions. We also agree and monitor realistic payment plans as well as signpost people to other sources of advice, offering a more holistic approach to debt management.

Enabling a welfare-oriented approach

With more than ten years of experience delivering welfare support schemes, we know that people in crisis value simple processes and a friendly voice.

We also know that efficient delivery is equally vital to the sustainability of key services, which means making the most of automation where it can add value. This includes enabling revenues and benefits teams to complete visits in the field, updating the back office automatically.

We’re also developing a new analytics function for NEC Revenues. By analysing patterns in revenue data and presenting it graphically, it will help to distinguish between habitual bad payers, first-time defaulters and people with reducing amounts of credit, enabling the right mix of automated activity and specialist action.

By making it easier for residents to access support quickly, and to create more manageable repayment plans as they fall into arrears, our software and services help you focus on the right type of action – from prevention to enforcement – every time.

Get in touch to find out how we might transform your approach to debt management.