What is ‘Breathing Space’ the Debt Respite Scheme1?
What is ‘Breathing Space’ – The Debt Respite Scheme?
The Government Debt Respite scheme comes into effect on 4th May 2021. It is a legally enforced Breathing space that allows you time to seek professional debt advice with the peace of mind that your creditors cannot enforce or take legal action to recover their debts.
There are two types: Standard and Mental Health Crisis.
|Standard Breathing Space
|Mental Health Crisis Breathing Space|
|Who is eligible||An individual with a qualifying debt who meets eligibility criteria and conditions||A client with qualifying obligation who meets eligibility criteria and conditions which are receiving mental health crisis treatment.
|What are the criteria||• Must be an individual living in England or Wales
• Must be struggling or about to start working to maintain payments towards debts
• You must have at least one qualifying debt, such as credit cards, loans, overdrafts, payday loans, catalogues etc. Other obligations, including rent, mortgage, utility and council tax arrears, also qualify; however, you do have to maintain ongoing payments, and only the arrears can be included.
• not have the means to clear debts, e.g., ISAs or assets which can be sold
• Not have a Debt Relief Order and Individual Voluntary Arrangement or be an undischarged bankrupt
• Not already had a breathing space in the last 12 months
|• Must have a qualifying debt
• Must be receiving mental health crisis treatment what
|What are the conditions?||• You must engage with the advisor throughout the Breathing Space • You must keep paying ongoing liabilities such as your priority bills. You must not take out additional credit over £500
|The nominated point of contact must engage with the debt adviser how|
|How often can you apply||No more than once a year||No limit.|
Is it Suitable for me?
If you are struggling or about to start working with problematic debt and require time, seek debt advice and consider your options. Breathing Space could be for you.
Benefits of Breathing Space
Most importantly, there are no charges or fees to be paid for applying for and being granted Breathing Space.
Breathing Space will prevent creditors from taking most enforcement action or adding fees – as long as you meet breathing space conditions (no requirement to meet conditions in Mental Health Crisis Breathing Space).
Breathing Space provides you with the time and opportunity to get advice from advisory organisations that are regulated and experienced in assisting with problem debts. Creditors are prevented from starting or continuing any action during the Breathing Space period.
What are the Risks?
There are conditions which apply which, if not adhered to, can mean that your Breathing Space is cancelled. These include: –
- You must engage with Debt Advice
- You must report changes in circumstances
- You must pay certain ongoing liabilities (if you can afford to do so)
- You must not take out additional credit over £500
The conditions above do not apply to Mental Health Crisis Breathing Space.
Certain debts cannot be included; these include ongoing rent or mortgage payments, ongoing utilities and council tax unless you have received a reminder notice for the remaining year’s bill for council tax.
Although Creditors cannot apply or backdate the interest accrued or take enforcement action during the breathing space, once the breathing space has ended, if you haven’t kept up with payments, it may still be treated as a breach of the repayment plan.
Who can set it up for you?
It can only be provided by a debt adviser regulated by FCA to provide Debt counselling or a local Authority that provides debt advice to its residents.
The FCA regulates Debt Support Direct, and all our advisors have undergone detailed training on Breathing Space.
When in contact with Debt Support Direct during the initial call, the adviser can determine whether Standard or Mental Health Crisis Breathing Space is appropriate.
If so, your name, address, date of birth and creditor details will be added to the electronic service.
Your details will be entered into the moratorium register by the end of the following working day.
Breathing Space will start the following day, and creditors will be notified of the Breathing Space via the online portal.
There will be a mid-way review for Standard Breathing Space after day 25 and day 35. This review is to determine that all of its conditions are being met.
For a Mental Health Crisis, the debt adviser will contact the nominated point of contact to check whether the individual is still receiving mental health crisis treatment every 20-30 days. Once the mental health crisis treatment has ended, the Mental Health Crisis Breathing Space will end 30 days later.
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Which Debt Plans apply to you?
We assess your circumstances based on your individual circumstances and will assess for all available debt advice solutions.
Please find below a list of debt solutions we will evaluate for:
- Debt Management Plan (DMP) – Information on a debt management plan
- Individual Voluntary Arrangement (IVA) – Information on an IVA
- Debt Relief Order (DRO) – information on a DRO
- Bankruptcy – information on Bankruptcy
If you have used our online application form, we will contact you to run through your income and outgoings and discuss your options so you can make an informed choice. At Debt Support Direct, we offer all statutory debt solutions in England, Scotland, Wales, and Northern Ireland so that you can choose the debt solution tailored to you and your circumstances.
If you have an attachment of benefits and have chosen the debt solution that you feel is the most appropriate, there will be some paperwork to fill in to put the debt solution programme in place.
Our debt advice is free, non-judgmental, and friendly, so if you are struggling with debt, speak to one of our experienced debt experts for a confidential chat on 0161 549 9848.
Free and impartial money advice is available from the Money Helper, an organisation set up by the Government for people in debt.
Debt Support Direct does not administer any debt solutions; we will assess your debts, circumstances and affordability and signpost you to an organisation or charity that can set up and help the debt plan you decide suits your circumstances.
All debt solutions should be very carefully considered. Some providers may charge fees if a solution is taken; if applicable, these will be outlined during your consultation.
Your ability to obtain further credit in the short term will likely be affected, which may also be the case over the medium to long term. Calls from mobile phones and other networks may be charged to our free phone number.
The Financial Conduct Authority regulates Ruby Holdings Limited, trading as Debt Support Direct. We can offer debt advice for both formal and informal solutions. All debt solutions must be carefully considered, and you must take independent advice.
There are sources of free debt advice and services. You can find out more by contacting the Money Helper on 0800 138 7777 or visiting moneyhelper.org.uk
Here are some links to UK debt charities that can provide help and advice on managing debt:
Please carefully read the information on these websites to understand what services they offer and if they would fit your needs. Reaching out for help as soon as you start having difficulties managing your debts is important. These organisations can help you understand your options and work with you to develop a plan to get back on track.