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New scheme to offer breathing space

04/05/2021

Brits struggling with debt can apply for a 60-day “breathing space” period through a new support scheme.

The Debt Respite Scheme launches today (May 4) after initially being announced by the government in 2019.

Designed to give borrowers protection from creditors for a short period of time, the temporary measure is being introduced as it’s estimated that 1.2 million people have fallen behind on bills.

The temporary measure will also stop interest and other charges being added to debt during the breathing space period.

To qualify for the scheme, Brits must work with a professional debt adviser to search for a long-term solution to clear what they owe and must stay on top of repayments during this time

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

 

Who can apply for breathing space?

There are two types of breathing space: a standard breathing space and a mental health crisis breathing space.

A standard breathing space is available to anyone with problem debt and gives them legal protections from creditors for up to 60 days.

Protections include pausing enforcement action and contact from creditors as well as freezing most interest and charges on debts.

A mental health breathing space is slightly different and has tougher protections.

This is only available to someone who is receiving mental health crisis and lasts as long as that person’s mental health crisis treatment, plus 30 days regardless of how long the crisis treatment lasts.

 

What debts can be included?

Not all debt can be included in the breathing space so it’s important to be aware of the debts that can be included.

Qualifying debts can include any that the applicant had before the legislation comes into force on May 4.

According to the government websites, qualifying debts include:

• Credit cards

• Store cards

• Personal loans

• Overdrafts

• Utility bill arrears

• Mortgage or rent arrears

Government debts like tax and benefit debts are also likely to qualify unless highlighted as being exempt.

Joint debts can also be included in the breathing space, even if only one person applies for the scheme.

Guarantor loans can also be included; however, the protection doesn’t expect to the guarantor. They can apply for their own breathing space if they’re eligible.

 

What debts can’t be included?

Not all debts can be included in a breathing space, including:

• Secured debts

• Debts incurred after your breathing space started

• Debts from fraud

• Court fines

• Child maintenance debts or money owed under an order from family court proceedings

• Debts from a confiscation order

• A crisis or budgeting loan

• Student loans

• Advance payments of Universal Credit

• Council tax debts that are not due yet

• Personal injury damages

People who have already found help for their debts, such as an Individual Voluntary Arrangement (IVA), a debt relief order or have filed for bankruptcy cannot apply for the scheme.

You must apply through an experienced debt adviser who will submit the breathing space application to the Insolvency Service on your behalf.

 

Finding a longer-term debt solution

While the new scheme offers short term relief from debt problems, anyone interested in applying for the breathing space scheme must seek a longer-term solution for their money problems.

Knowing where to turn for debt help can seem daunting but there is a wealth of support available.

As one of the UK’s leading debt help companies, Creditfix has helped more than 182,000 find a solution for their debts.

For further advice about the breathing space scheme, how to apply or for general debt advice, speak to an experienced Creditfix adviser.

 

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

 

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