Debt respite scheme- Breathing Space

The debt respite scheme also known as breathing space was launched on the 4th May 2021.  This allows any person with debt issues the right to legal protection from their creditors.

There are two types of breathing space:

• Standard breathing space.  Available to anyone with a debt problem it gives legal protection from creditors for up to 60 days. The protection means no creditors can make contact and interest and charges will be frozen on the debt
• Mental health crisis breathing space.  Available to anyone who is receiving mental health crisis treatment.  The legal protection lasts as long as that person's treatment, plus 30 days , no matter how long the crisis treatment lasts.

A breathing space can only be started by:

• A debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling, or;
• A local authority (where they provide debt advice to residents)

Debts included in the breathing space must be qualifying debts.  Most debts are likely to be qualifying debts.

These include:-

• credit cards;
• store cards;
• personal loans;
• pay day loans;
• overdrafts;
• utility bill arrears; and
• mortgage or rent arrears.

Government debts like tax and benefit debts are all likely to qualify, unless they are included in the list of excluded debts which are:

• Secured debts (like mortgages, hire purchase or conditional sale agreements). You can only include arrears on these debts that exist at the date of an application for a breathing space.
• Any new secured debt arrears that happen after the breathing space starts are not protected. If a secured debt is on-going and a debtor misses payments, it could mean the debt adviser stops their breathing space
• Debts incurred from fraud or fraudulent breach of trust. 
• Discharge from bankruptcy does not release a person from bankruptcy debts which they incurred by fraud.
• Liabilities to pay fines imposed by a court for an offence. This includes any interest on the fine and any penalties connected to it. This does not include penalty charge notices, like parking tickets.
• Obligations from a confiscation order
• Child maintenance or obligations under an order made in family court proceedings.
• A crisis or budgeting loan from the social fund.
• Student loans.
• Damages they need to pay for death or personal injury caused to someone else.

For further information and guidance please refer  here

Or for further information about rent arrears and the Breathing Space scheme click here.