THE NEW BREATHING SPACE and Mental Health Crisis Debt Respite Schemes will come into effect in England and Wales from 4 May 2021. 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. 

People can apply through a debt adviser for sixty days Breathing Space. They must continue to engage with their debt adviser and not take out any new borrowing over £500 in this time. They will 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 which are included in Breathing Space while these conditions are met. Breathing Space can only be applied 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.”

For people who are being treated for a mental health crisis, a separate scheme applies. An approved mental health professional will need to confirm they are receiving crisis care. A GP cannot make this confirmation, but should be able to refer to someone who can. People can then seek help from the scheme, or someone else – for example a carer, social worker or mental health nurse – could apply on their behalf.

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

This type of Breathing Space can be applied for more than once a year. If people still need more time to tackle their debts once the crisis treatment is over, they can still apply for standard Breathing Space afterwards.

Lorraine 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.”

For both types of Breathing Space, people must live in England or Wales and not currently be in another formal debt solution such as a Debt Relief Order, Individual Voluntary Arrangement or bankruptcy. They will also need to owe at least one qualifying debt. These qualifying debts include things like credit cards, personal loans or overdrafts. Many priority debts, such as rent arrears, fuel arrears and council tax arrears will also qualify.

Some debts will not qualify for Breathing Space. These include court fines, Universal Credit advance payments and student loans. Secured debts like mortgages or car finance will not qualify unless someone has fallen into arrears on their payments.

Lorraine Charlton said: “Most common types of problem debt would be qualifying debts in Breathing Space. This includes priority debts – like rent arrears or council tax debt – that can have particularly severe consequences when you can’t pay them.

“Your debt adviser will work with you to find the best way forward. That might involve applying for Breathing Space to buy some time while you choose the right debt solution to fit your circumstances.”

* More information on Breathing Space here.

* Source: Citizens Advice