A new government backed scheme has launched to give those with debt some Breathing Space (the Debt Respite Scheme). It aims to help over 700,000 people struggling this year in England and Wales. The scheme will give those eligible 60 days to get their finances in order with certain legal protections. There will be no penalty charges, most interest will be paused and creditors won’t be able to enforce action.
Breathing Space gives you time to deal with your debts and begin managing your money if you’re not ready for other debt solutions. The scheme provides access to professional debt advice to help those in need to understand their money and being building a financial plan for the future with structured payment plan for your debts.
How Breathing Space can help you
This programme is also recognising the link between debt problems and mental health issues. There are stronger protections for those in mental health crisis treatment. The full duration of treatment (no matter how long it lasts) plus an additional 30 days will be covered by the protections. An approved mental health professional can certify the treatment is ongoing. Then a debt advisor can then take the claim into consideration.
The 60 days will stop enforcement action, interest increases and penalty charges. However, the scheme requires you to continue paying any debts and ongoing bills, so unfortunately not a payment holiday. However, a debt advisor can help you find a sustainable and realistic way to tackle your debts.
Most debts will qualify for the scheme including universal credit overpayments, personal and payday loans, credit and store card bills, overdrafts, rent and mortgage arrears. However, the only way to access Breathing Space is via a professional debt advisor; we at London Advice Centre offer this service, but in line with the regulations of the scheme not all applications will be put forward for it (though all will be considered) as Breathing Space may not be the best route forward. London Advice Centre can take your current financial situation into consideration including your savings, access to income or funds, but the applicant may just need help with budgeting therefore Breathing Space would not be appropriate.
What’s the process?
- Contact a debt advisor and get debt advice – the advisor will check if you’re eligible for the scheme. If you are applying for the Mental Health Crisis Breathing Space you must receive confirmation of your treatment by an Approved Mental Health Professional.
2. Apply – your debt advisor can help you apply for the scheme.
3. Your 60 Days in Breathing Space begins – this is normally within two days of submission of application.
4. Day 1-20 – Creditors can challenge your application or any specific debts that you’ve included. You can also add any debts to the Breathing Space as long as they occurred before the 60-day period (these will be valid for the rest of the scheme not for their own 60-day period).
5. 30-day review – in most cases the scheme will continue for the full 60 days but Breathing Space could be cancelled or certain debts removed depending on the circumstances.
What are the requirements to make me eligible?
- Be an individual (you cannot claim as a family/with a partner/as a business)
- Owe a debt that qualifies within the regulations to a creditor
- Live in England or Wales 9not Scotland unfortunately)
- Not be bankrupt/Not have an Individual Voluntary Arrangement (IVA)/Not have a Debt Relief Order (DRO)
- No assets that could be used to clear the debt
- No income large enough to clear the debt
- Not have had a Breathing Space in the last 12 months
If you think Breathing Space is right for you, talk to one of our advisers who can help you with the process. Call 020 3092 8211 to book a debt advice consultation now.
If this article wasn’t quite enough information for you, please check out these links to the UK government website with more detail.
Please note: this post was written in line with guidance at the time of publishing. For the most up-to-date guidelines please refer to gov.uk