People who are struggling to manage their finances could take out a court order allowing them to have a "debt repayment holiday" under new plans being proposed by the Government.

As part of the plans, people who find themselves unable to repay their debts due to a change in circumstances, such as a divorce, would be able to go to court and ask for repayments to be suspended for up to a year.

While interest would continue to accrue during the period, late payment charges would not be levied.

The scheme, known as an Enforcement Restriction Order, would give people temporary relief from debt if they suddenly found a change in circumstances used up a lot of their income.

But they would have to persuade the courts that they would be able to continue repaying their debts once the period finished in order to be granted one of the orders. They would also be charged a fee, although the amount they would have to pay has yet to be decided.

The orders would be aimed at people who have multiple low value debts, and debts including mortgages, child maintenance and student loans would not be covered.

If the proposals, which were published in a consultation paper by the Ministry of Justice, were accepted, they would come into force in 2010.

Civil justice minister Bridget Prentice said: "Debt's a problem that can affect anyone at any time - unexpected costs can hit even the most diligent and careful person. We want to ensure that people who run up debts are given every possible opportunity to pay them off.

"The new Enforcement Restriction Order will give short-term help to people who meet a sudden and unforeseen change to their financial circumstances, from which they are soon likely to recover."

The Government is also consulting on changing Administrative Orders. These are long-term debt management plans administered by the courts, under which interest on debts is suspended in return for people repaying a set amount each month for a set period of time, which is decided by a judge.

The current scheme only applies to debts up to £5,000, but the Government is considering increasing this to £15,000.

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