The Debt Respite Scheme – better known as “the Breathing Space” – went live on 4 May 2021.
A Breathing Space is a 60 day period while you get debt advice and find a suitable debt solution.
During this 60 days, you get legal protection from your creditors for most debts and it stops interest and charges being added.
For a few people this will be a real help, but often there may be better alternatives. A Breathing Space isn’t a debt solution itself, it is just a short pause while you get a proper debt solution sorted out.
A Mental Health Breathing Space has also been introduced. This works differently and should give longer-term help for people in a mental health crisis.
How do you get a Breathing Space?
To be eligible for a Breathing Space, you have to:
- live in England or Wales;
- not have had a Breathing Space in the last 12 months.
A Breathing Space is set up by an approved debt adviser. There is no “do it yourself” option.
As the Breathing Space is just a short-term hold, it’s good to go to a debt adviser who can help with your sort of debt problems when it ends. See Good places for debt advice for my suggestions.
The debt adviser has to agree that you need debt advice and that a Breathing Space is a good option for you.
How should the Breathing Space help?
As an overview, the 60 day Breathing Space can help in three ways for the debts that are included in it:
- Interest and charges can’t be added.
- Lenders and debt collectors shouldn’t ask you to make a payment to the debt.
- In most cases, enforcement action (taking you to court, sending bailiffs etc) is halted.
The drawbacks of the Breathing Space
Only 60 days!
The biggest drawback is that it only lasts for 60 days. When debt advisers started calling for a breathing space we wanted 6-12 months.
But creditors objected so it is only 60 days. At the end of that, you are likely to get a LOT of letters and other contacts from the creditors in your Breathing Space.
For many people, 60 days will be too short to find a new job, get benefits applications and appeals resolved, or clear priority debts.
It will even be too short to set up some debt solutions. Debt Relief Orders usually take longer than 60 days. If you need to save up for the high bankruptcy fees, that may take many months.
Not helpful with all debts
A debt adviser can look at all your debts and explain if any can’t be included. For example magistrates’ court fines cannot be included but parking tickets from the local council or private car parks can.
Arrears on secured debts such as a mortgage or car finance can be included, but you still need to keep paying the normal monthly amounts.
Sometimes a debt can be included but it won’t help you much or it may affect someone else:
- if a guarantor loan is included, the lender can still ask the guarantor to pay;
- if you stop payments to a joint loan, the other borrower’s credit record will be harmed;
- money being deducted from Universal Credit to pay the UC Advance, benefit overpayments or energy arrears will continue. This may happen with deductions from other benefits too;
- money being deducted from your wages via an attachment of earnings will continue.
All eligible debts must be listed
You can’t decide to leave some debts out:
- unlike the Covid-19 payment breaks, the Breathing Space does not protect your credit score;
- you may not want your landlord told that you have financial problems;
- you may worry your bank could withdraw their overdraft. Or that a catalogue account you are using that is not in arrears may be closed;
- if you haven’t been contacted for a while about some old debts, you may not want them informed of your address;
- some old debts may be close to being “statute barred“. It isn’t clear if a Breathing Space will mean you have “acknowledged” these debts so the six year time clock would be reset.
These disadvantages of telling all your creditors are usually well worth it for a “proper” debt solution that is of long-term use to you.
But for just a short hold on your accounts? Often this will seem premature.
Only one Breathing Space every 12 months
Do you need the protection right now? As you can only have one Breathing Space every 12 months, you don’t want have one now if you don’t really need it yet.
Many people are worried about being taken to court, CCJs or being made bankrupt when this is very unlikely to happen soon. For example it can feel scary not being able to pay a credit card or a loan for the first time, or being sent a Default Notice.
A debt adviser can often reassure you about this and you can then look at what your debt options are.
Possible better options
That was a long list of drawbacks. But the good news is that if a debt adviser says a Breathing Space isn’t right for you, it is usually because you have better options.
If you are up to date with your household bills and credit repayments and can afford them, a Breathing Space is not suitable. You may know you are going to be made redundant next month say, but you do not need immediate protection from your creditors. It’s still a good idea to talk to a debt adviser now about what your options may be, so you can plan ahead. And at some point you could possibly need a Breathing Space, but not yet.
Where there is a better debt solution for you immediately then there is usually no point in delaying this. Kicking the can down the road with a Breathing Space first just prolongs things.
It is normally easy to get a temporary hold put on accounts such as credit cards, unsecured loans and overdrafts. You or your debt adviser just ask the creditor, saying you are taking debt advice and can they accept no payments or a lower amount for a few months.
The Mental Health Breathing Space
If you are having treatment for a mental health crisis, you can get longer-term help through the Mental Health Breathing Space scheme, which also comes into effect from 4 May 2021.
The Mental Health Breathing Space provides the same protections as the “standard” Breathing Space but it is a lot more flexible. It lasts for the duration of the crisis treatment plus 30 days and you are not limited to one a year.
You don’t need to take debt advice during a Mental Health Breathing Space – when it ends many people will need debt advice and at that point a standard Breathing Space may be appropriate.
To be eligible for a Mental Health Breathing Space, an Approved Mental Health Professional (AMHP) will need to confirm you are receiving crisis treatment and complete a very short evidence form to say this.
This form can be submitted not just by you – many people in a mental health crisis may not be able to do that – but also by your social worker, a mental health nurse, your care coordinator etc.
See The single point of entry for the Mental Health Crisis Breathing Space for details about this.
If you aren’t sure if you are getting is “crisis treatment” ask your GP or someone involved with the current help you are getting. Some people who are struggling with mental health problems may not qualify as being in “crisis treatment” and will need to talk to a debt adviser about a standard Breathing Space.