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What you need to know about ‘Breathing Space’ debt rules

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Written by: Emma Lunn
27/04/2021
Breathing Space and Mental Health Crisis Debt Respite Schemes come into effect in England and Wales on 4 May.

Breathing Space is a new scheme that gives people temporary protection from most types of debt collection while they take action to get on top of their debts.

What is Breathing Space?

You can apply through a debt adviser for 60 days’ Breathing Space. You must continue to engage with your debt adviser and not take out any new borrowing of more than £500 in this time.

You’ll also have to continue to make certain types of payments, including ongoing housing costs, utility bills, and taxes.

Interest and fees will be paused on debts included in Breathing Space while these conditions are met. You can only apply for Breathing Space once in a 12-month period.

Lorraine Charlton, debt expert at Citizens Advice, said: “The coronavirus pandemic has had a huge impact on lots of people’s finances, with millions falling behind on essential bills and getting into debt. With temporary protections on debt coming to an end, we’re worried that the real struggle will soon begin for many.

“If you have unmanageable debts, the new scheme could give you the time to get the advice that will help, and to start taking action. Breathing Space isn’t a temporary fix to simply keep your creditors at arm’s length. You’ll need to work with your debt adviser to try and make a plan to deal with your debts.

“For anyone who feels they can’t manage their debt, the most important thing is to seek help as soon as possible from a free and impartial debt advice charity like Citizens Advice.”

Help for borrowers suffering poor mental health

If you’re being treated for a mental health crisis, a separate scheme applies. An approved mental health professional will need to confirm you are receiving crisis care.

You can then seek help from the scheme yourself, or someone else. For example, a carer, social worker or mental health nurse could apply on your behalf.

The pause on enforcement lasts as long as you’re receiving crisis treatment, plus 30 days. A nominated person will need to keep in touch with your debt adviser to update them about your ongoing treatment. However, you won’t need to receive debt advice or meet any ongoing requirements listed above.

You can apply for this type of Breathing Space more than once a year. If you still need more time to tackle your debts once your crisis treatment is over, you can still apply for standard Breathing Space afterwards.

Charlton said: “We know that struggles with debt and with mental health often go hand in hand. If you’re in the midst of a crisis, the special provisions in Breathing Space should give you the time and space you need until you are ready to address your problem debt.

“Really importantly, these provisions only apply if you’re currently receiving crisis treatment when you make the application. So, even if you are struggling with your mental health, you won’t be eligible unless an approved professional confirms that you’re getting crisis treatment.”

Who is eligible for Breathing Space?

For both types of Breathing Space, you’ll need to live in England or Wales and not currently be in another formal debt solution such as a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA) or bankruptcy.

You’ll also need to owe at least one ‘qualifying debt’. ‘Qualifying debts’ include things like credit cards, personal loans and overdrafts. Many priority debts, such as rent arrears, fuel arrears and council tax arrears will also qualify.

Some debts won’t qualify for Breathing Space. These include court fines, Universal Credit advance payments and student loans. Secured debts like mortgages or car finance won’t qualify unless you’ve fallen into arrears on your payments.

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