The Debt Respite Scheme

The Debt Respite Scheme (Breathing Space) guidance comes into force on 4 May 2021. It gives a person with problem debt the right to legal protections from their creditors.

The Scheme will safeguard certain debtors from their creditors. It offers two types of breathing space:

  1. A standard breathing space
  2. A mental health crisis breathing space

Standard Breathing Space

A standard breathing space is available to anyone with problem debt. It gives them a 60-day moratorium from legal action being taken against them by creditors. During the 60-day period the person will benefit from a freeze on interest, charges, contact and most enforcement action.

Mental health crisis breathing space

A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and lasts as long as their treatment, plus 30 days from the end of the treatment.

Apply

Only debt advice providers (authorised by the Financial Conduct Authority) and a local authority can start a breathing space. The debt advice providers are responsible for the administration of a breathing space and are the point of contact.

Buckinghamshire Council cannot currently offer this level of debt advice service. Customers who wish to apply for this should contact a free debt advice provider such as Citizens Advice, Step Change, Christians Against Poverty (CAP). For a mental health breathing space you should contact Rethink Mental Illness.

A debtor who is unlikely to be able to repay their debts can apply for a standard breathing space. All applications will be considered but may not be granted in all circumstances. If someone has assets or could pay their debts with budgeting help, then they may not be granted a breathing space.

In order to grant a breathing space a debt advisor must confirm that the debtor:

  1. Is an individual
  2. Owes a qualifying debt to a creditor
  3. Lives or usually resides in England or Wales
  4. Is not an undischarged bankrupt, has a Debt Relief Order (DRO) or is in an Individual Voluntary Arrangement (IVA)
  5. Does not already have a breathing space or have had one in the preceding 12 months. However, there are no limits on granting Mental Health Crisis Breathing Spaces

A breathing space is not a payment holiday for the debtor and any debt repayment and ongoing liability should still be paid. However, recovery action cannot be taken by a creditor during that period if they do default on an included debt. If a debtor does not meet their liabilities the breathing space may be cancelled by the debt advisor.

Once a breathing space ends, creditors can:

  • start applying interest and charges again
  • commence enforcement action
  • start or carry on with legal proceedings (unless the debtor has entered into an alternative debt solution such as a DRO or IVA

More information

For guidance on The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) Regulations 2020, visit gov.uk.

For more information, call 01296 585167

This number is available:

  • Monday - Friday 09:00- 16:00
  • Saturday and Sunday 09:30 - 16:00