Breathing Space Scheme – Support for Individuals With Problem Debt

Year Published: 2021

With the introduction of the Government’s Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 due to come into force on 4th May 2021, how might this impact the recovery of a debt you are due from an individual?

Breathing Space has been introduced to support individuals who are struggling with problem debt, and can be put into place by either a Local Authority or an FCA approved Debt Advisor.

Once implemented, a 60-day period of breathing space will begin. The consequence of this is that interest and late payment fees have to be frozen, and any enforcement action stopped.

The 60-day period is intended to allow individuals to access professional debt advice, with the objective of finding a long-term solution to manage their problem debt.

In consideration of the bearing that problem debt can have upon mental wellbeing, those obtaining mental health treatment will receive the benefit of Breathing Space protection until their treatment is complete.

Types of Debt Covered by the Respite Scheme:

  • Debt owed by an individual to a business or another individual
  • Mortgage or rent arrears
  • Overdrafts
  • Credit cards
  • Government debt, i.e. Council Tax
  • Personal loans
  • Pay day loans
  • Utility bill arrears

It is envisaged by the Government that 700,000 individuals within the UK will receive professional support in its first year. Creditors should also benefit from the introduction of the scheme, with a sum in excess of £400 million by way of additional repayments expected to be received in the first year.

Whilst a 60-day period may have to elapse before you can consider your recovery options, the Breathing Space scheme could see some effective results and mutually satisfactory outcomes, potentially avoiding the need for unrealistic payment plans and/or the costs of Court proceedings and subsequent enforcement action.

If you have any questions about the Breathing Space scheme or would like support on a Debt Recovery related matter, please contact Jodie Sumner, Debt Recovery Executive, on 0161 475 7606 or email [email protected].

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