The Debt Respite Scheme (Breathing Space) is coming soon!

The new Debt Respite Scheme, also known as ‘Breathing Space’, comes into force on 4 May 2021. Here’s a reminder of how that will work, and who it could help.

How will the scheme work?

The Debt Respite Scheme will allow people with problem debt a period of time to sort their finances out. This period is known as a breathing space.

An individual who takes a breathing space will be protected from collections action during this period for almost all debts, including arrears on mortgages, council tax and utilities. And the interest and charges on their debts or arrears will be frozen during the breathing space period too.

There are two types of breathing space: a standard breathing space and a mental health crisis breathing space. The standard breathing space lasts for up to 60 days. A mental health crisis breathing space lasts for the duration of a patient’s mental health crisis treatment, plus 30 days.

Could it help me?

When you are in problem debt, it is important to:

1. get debt advice as soon as possible, so that you can
2. get a suitable plan in place to sort out your debts in a sustainable way.

To find a suitable, sustainable way to deal with your debts, you need to know how much money you have available. And your financial circumstances can sometimes make this difficult. For example, you might be newly unemployed. So while you’re looking for another job, you’re not sure what your income will be in the longer term.

In these sorts of situations, you might not be able to begin a debt solution until your finances stabilise. In the meantime, breathing space can take away some stress, and prevent your debts from getting any worse.

You are likely to be eligible for a standard breathing space if you:

• seek help with problem debt
• are not an undischarged bankrupt, or on a debt solution already
• have not already had a period of breathing space in the last 12 months
• have a qualifying debt.

All personal debts and liabilities count as qualifying debts, except:

• ongoing liability for secured debts (like mortgages, hire purchase or conditional sale agreements) – although existing arrears on these debts do qualify.
• debts incurred because of fraud
• court fines and confiscation orders
• child maintenance arrears
• social fund debts
• student loans
• damages due for the death or personal injury caused to someone else
• advance payments of Universal Credit
• council tax liabilities that are not yet due.

Existing arrears on your council tax are qualifying debts for breathing space, and so are rent arrears.

A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment. It’s there to give you a break until you’re well enough to deal with your finances. An approved mental health professional can arrange access to the Debt Respite Scheme on your behalf.

Whatever your situation, if you’re dealing with problem debt, don’t delay getting advice. A specialist debt adviser can help you decide on the most suitable way for you to begin dealing with your debts. That might mean starting a breathing space. Or it might mean going straight on to a debt solution, negotiating directly with your creditors or adjusting your budget.

You can find sources of free debt advice via the Money Advice Service website. Pick up the phone as soon as you can.