It’s been a trying few months for many UK citizens, and the financial challenges that so many are facing have not gone unnoticed. So just over two months ago, the UK Government introduced a new scheme – the Debt Respite Scheme (Breathing Space) – to assist those struggling with problem debt and the impacts on their mental health. The scheme was designed to help people in financial difficulty to manage the pressure and stress caused by bad debt, by giving them some respite to get on top of their finances and alleviate their debt problems.
What is Breathing Space?
The Debt Respite Scheme, or Breathing Space, is a free scheme launched by the UK Government on 4 May 2021. The intent of the scheme is to alleviate the seemingly overwhelming pressure and stress of being over-indebted or financially stretched, by allowing debtors a little time to rebuild their finances, while also seeking debt advice and/or mental health crisis treatment.
There are two types of Breathing Space:
- Standard Breathing Space – This is available to anyone with problem debt. It provides legal protection from creditors for 60 days – which includes pausing most enforcement actions and contact from creditors, it also freezes most interest and charges on debts.
- Mental Health Crisis Breathing Space – This type of breathing space is only available to someone who is receiving mental health crisis treatment and offers stronger protection. It lasts for as long as the person’s treatment, plus 30 days after it ends, regardless of how long the treatment lasts.
The good news is that most debts qualify for Breathing Space, including credit and store cards, personal and payday loans, overdrafts, utility bills, rent and mortgage arrears and government debts. Debts that will not qualify for breathing space are court fines, student loans, Universal Credit advance payments and secured debts.
Who qualifies for a Breathing Space?
In order to qualify for Breathing Space, you will need to owe at least one qualifying debt, be living in England or Wales and not currently be in another formal debt solution, like an Individual Voluntary Arrangement (IVA), Debt Relief Order (DRO) or Bankruptcy.
It is important to note that a person cannot apply for Breathing Space if they have utilised a Breathing Space within the last 12 months. Please also note that Breathing Space was designed as a short-term solution, so although you may qualify, it may not be the right solution for you.
How do you start a Breathing Space?
Before entering into Breathing Space you will seek debt advice to decide whether it’s the right option for you. Debt Movement is authorised to provide debt advice by the Financial Conduct Authority (FCA) under registration number 940843 and is authorised to administer a Breathing Space. Please feel free to contact us, and we’ll guide you through the process.
I don’t qualify for a Breathing space, what can I do?
If your debt problem is long-term, Breathing Space may not be the right fit for you. At Debt Movement, we understand that bad debt happens to good people. Dealing with the emotional stress of financial trouble can be overwhelming, but you are not alone, and Debt Movement is here to offer compassionate and expert advice to help you manage your debt. If a Breathing Space is not right for you, our advisors will assist you in finding the correct debt management solution, so that you can take control of your finances and live your best life again.