Breathing space: Debt Respite Scheme

In May of 2021 the UK Government launched the Breathing Space scheme, a scheme designed to offer people with problem debt the time they need to sort out their finances without facing pressure from creditors.

In this guide we’ll explore the Breathing Space scheme more closely, taking you through what it is, how it works, whether you’re eligible for Breathing Space, and how to apply if you are.

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What is the Breathing Space Debt Respite Scheme?

The Debt Respite Scheme, more commonly known as Breathing Space, is a Government scheme launched in May 2021 that aims to offer people the time they need to deal with problem debt without the fear that they’ll face creditor action.

As long as you have qualifying debts and come through the eligibility checks, creditors won’t be able to add interest or charges to your debts for a fixed period of time, and you will also be protected from legal proceedings.

It’s important to note that Breathing Space is not a payment holiday. That means that while you’ll have to continue paying ongoing liabilities like utility bills or business debts, you will be protected from enforcement action if you’re unable to pay the money owed.

Are there different types of Breathing Space?

There are two different types of debt respite available under the Breathing Space scheme; one for any situation where people owe money to creditors, and another aimed specifically at people receiving mental health crisis treatment who are also facing debt repayments.

Standard breathing space

Anybody struggling to repay unsecured debts like personal loans or other debts can apply for the Breathing Space scheme, which will protect them from legal proceedings, as well as interest and charges, on the money they owe.

Mental health crisis breathing space

Someone who is receiving mental health crisis treatment and is also having monetary issues can apply for mental health crisis Breathing Space. As well as offering you all the guarantees of the standard scheme, there are stronger protections in place to shield vulnerable people from creditors.

Which type of debt concerns you?

Credit Cards

Overdrafts

Payday Loan

Catalogue & Store Cards

Council Tax

Personal Loan

Am I eligible for debt respite under the Breathing Space scheme?

To qualify for the standard Breathing Space scheme and get some respite from your debt problems, you will need to:

  • Be a resident of England or Wales
  • Be applying for yourself (or get permission from the other person in the case of joint debts)
  • Owe a qualifying debt to creditors (see below)
  • Not currently be involved in a debt solution like an Individual Voluntary Arrangement (IVA) or Debt Management Plan (DMP)
  • Not have successfully applied for the Breathing Space scheme within a year of your current application

If you have more interest in the mental health crisis Breathing Space scheme, you must still meet the above criteria, but you must also be receiving mental health crisis treatment at the time of your application.

What types of debt are covered by the Breathing Space scheme?

Qualifying debt

Eligible debt that will allow you to be covered by the Breathing Space scheme includes:

  • Personal loans
  • Payday loans
  • Overdrafts
  • Arrears for utility bills
  • Arrears for your mortgage or rent
  • Credit cards
  • Store cards

You should understand that secured debts like the mortgage on your house mortgage are not covered by the Breathing Space scheme, so you will have to continue paying them. If you find yourself in mortgage arrears or rent arrears, however, you will be eligible to apply.

How long does debt respite last?

How long the Breathing Space moratorium on your debt lasts will depend on which version of the debt respite scheme you’re applying for.

Standard Breathing Space

If you’re applying for the standard respite scheme, your Breathing Space starts on a particular day (to be confirmed during your application process) and will usually finish 60 days after the day it started.

The only way your breathing space will end before this is if a debt adviser or a court cancels the arrangement, or if the person involved in the arrangement passes away.

Mental health crisis Breathing Space

With the mental health crisis Breathing Space, your respite will end either 30 days after your mental health treatment ends, or 30 days after your debt adviser gets no receives no response when asking your chosen point of contact about the status of your ongoing mental health treatment.

How do I apply for debt respite through the breathing space scheme?

You can only gain access to a Breathing Space by applying through a debt adviser, preferably one licensed by the Insolvency Service, the Insolvency Practitioners Association, or the Financial Conduct Authority (FCA).

Applying for a standard breathing space

To apply for a standard breathing space, you should reach out to an approved debt adviser like IVA Plan.

The debt adviser will consider your circumstances, including how much debt you owe and how many creditors you owe it to, and come to a decision on whether a Breathing Space would be appropriate.

You can find out more about applying for a standard Breathing Space on the UK Government website, here.

Applying for a mental health crisis Breathing Space

If you’re receiving mental health crisis treatment, the process of applying for a Breathing Space works slightly differently, with the main difference being that you someone else can apply on your behalf.

As long as an Approved Mental Health Professional (AMHP) can confirm you’re receiving mental health crisis treatment, you can use that as evidence in your application to a debt adviser.

In addition to applying for yourself, the following stakeholders can apply for a mental health crisis Breathing Space on your behalf:

  • Approved Mental Health Professionals
  • Your carer
  • A mental health nurse
  • A social worker
  • Anyone you officially designate as your representative in the matter

You can find out more about applying for a mental health Breathing Space on the UK Government website, here.

You could write off up to 81% of your unsecured debt today

Where can I get debt advice or further information on debt respite?

If you’re struggling with problem debt and have no idea how to pay, or you’re suffering from mental health problems that make it difficult for you to deal with your money worries, it might be a good idea to apply for some Breathing Space.

As one of the UK’s biggest debt solution providers, we can help. Once you talk one of our friendly advisers through your situation, they can take you through the options available to you and help you come to the decision that’s best for you, whether that’s Breathing Space or a longer term debt solution.