The Debt Respite Scheme / Breathing Space

The Debt Respite Scheme, or Breathing Space came into effect in England and Wales on 4th May 2021 and is a free scheme launched by the government. The aim of the scheme is to give people temporary protection from most types of debt collection while they take action to get on top of their debts.

The coronavirus pandemic has had a huge impact on lots of people’s finances, with millions falling behind on essential bills and getting into debt. With temporary protections on debt coming to an end, the breathing space scheme will give more support for those who need it.

A debt adviser will assess your circumstances and apply for the breathing space for you, if you pass the eligibility checks. During this time your creditors will not be able to charge interest and fees or take collection and enforcement action for 60 days, although you will still need to make your normal payments, if you are able to.

Mental Health Crisis Breathing Space moratorium

If you’re being treated for a mental health crisis, a separate scheme applies. To apply for this scheme an approved mental health professional will need to confirm that you are currently receiving crisis care – your GP cannot do this, however they should be able to refer you to someone who can.

In this scheme, the breathing space will continue as long as you’re receiving crisis treatment and for a further 30 days afterwards. You will not be required to speak to your debt adviser during this time, a nominated person will need to keep in touch with us to update them about your ongoing treatment.

Who is eligible for breathing space?

Breathing Space isn’t available to everyone. There are certain criteria you need to meet to benefit from the Breathing Space scheme.

To be eligible you must:

– Live in England or Wales
– Owe at least one qualifying debt to a creditor

And you must not:

– Have been on the Breathing Space scheme in the past 12 months (not including mental health Breathing Space)
– Be on a debt relief order (DRO)
– Have an individual voluntary arrangement (IVA)
– Be subject to an interim order
– Be an undischarged bankrupt

After your Breathing Space ends, you won’t be able to apply again for 12 months, so it’s important that you get a debt solution set up during the time you’re on Breathing Space.

What type of debt can be included?

The types of qualifying debt is quite broad and include things like credit cards, personal loans, or overdrafts. Many priority debts, such as rent arrears, fuel arrears and council tax arrears will also qualify. Some debts won’t qualify for Breathing Space. These include court fines, Universal Credit advance payments and student loans. Secured debts like mortgages or car finance won’t qualify unless you’ve fallen into arrears on your payments.

Most common types of problem debt would be qualifying debts in Breathing Space. This includes priority debts – like rent arrears or council tax debt – these types of debt can have particularly severe consequences when you can’t pay them.

Some debts aren’t included in Breathing Space. These are generally similar to the debts that aren’t included in bankruptcy or other formal debt solutions, such as criminal fines, child maintenance, student loans and personal injury debts. If you have debts that won’t be included in Breathing Space, your debt advice provider will discuss what to do about these while you’re being registered on the scheme.

What will I have to do during Breathing Space?

You will need to do a few things whilst breathing space is in place – to prevent your arrangement from cancelling you must:

  1. Keep up normal, regular payments – this includes mortgage, rent, council tax, utility bills, insurance policies
  2. Continue seeking debt advice – you will need to keep in contact with your debt adviser and aim to put a long-term solution in place. We can help with both.
  3. Keep us updated – you are expected to update your debt adviser of any changes to your circumstances, such as a new job, new home, new mobile number etc
  4. Not take out further credit – while you’ve got Breathing Space, you’re not allowed to take out more than £500 in additional credit, either on your own or jointly with another person

If you think may be eligible and wish to apply for breathing space, please contact us on 01392 459267 where one of our trained debt advisors will be happy to help you.