Breathing Space (Debt Respite Scheme)
What is Breathing Space (Debt Respite Scheme)?
The Debt Respite Scheme (Breathing Space) came into force on 4th May 2021 and offers individuals legal protection from creditors for up to 60 days for those trapped in problem debt. This includes pausing enforcement action, stopping creditor contact and freezing interest and charges on debts. Breathing space applies to residents of England and Wales.
There are two types of breathing space: a standard breathing space and a mental health crisis breathing space.
Standard Breathing Space
A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
Mental Health Crisis Breathing Space
A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
How does Beathing Space work?
Breathing space will provide those struggling with problem debt 60 days to understand the options available to them to deal with their debts, providing some respite from the pressure and stress of dealing with creditors. Breathing Space can only be initiated by an approved debt adviser who is regulated by the Financial Conduct Authority (such as Angel Advance) or a local authority debt adviser.
For Standard Breathing Space, you must be willing to work with your debt adviser to get a long-term debt solution in place. You’ll be expected to participate in a mid-way review with your adviser and notify them of any changes to your situation.
Why will Breathing Space benefit me?
Your decision about how to deal with your debts can be difficult enough, even more so when you’re being chased by several creditors. Breathing Space will allow you some time to focus your mind on making the right decision to sort out your problems for good and get a debt solution, some of which can take several weeks to be implemented, in place.
Will my credit file be impacted by Breathing Space?
Breathing space is not a payment holiday and should only be accessed by people who are trying to get a long-term solution in place to deal with their debts. Any payments missed during breathing space or any subsequent debt solution will be registered on your credit file and impact your chances of getting credit in the future.
If you enter a solution at the end of your breathing space period, your credit file will be further impacted. Make sure you read the detail of the solution to understand the specific impact to your credit file.