What is Breathing Space?

 

Breathing Space provides you with 60 days of protection from your creditors. If you’re struggling to repay your debts, Breathing Space could give you extra time and space to make important decisions about your financial future.

 

Breathing Space was created in May 2021 under the Government’s “Debt Respite Scheme”. It provides you with legal protection from most creditors and temporarily stops interest and other charges. You’re expected to use this time to get expert debt advice and to identify a longer-term debt solution.

 

It is only available to residents of England and Wales.

 

Benefits of Breathing Space

 

Your included creditors cannot take (or continue with) legal enforcement action to recover your debts for a period of 60 days. This could be an important benefit if you’re facing aggressive creditor recovery action, the involvement of bailiffs, or if you have left it very late to get debt advice.

 

Included creditors cannot add interest or charges during the Breathing Space period. This means that you can get debt advice without worrying that your overall total debt is increasing.

 

Included creditors should not contact you during the Breathing Space period. Reduced creditor contact may help to reduce anxiety and help you to focus on identifying a suitable debt solution.

 

You can include a joint debt in this process and the other borrower will also benefit from the same protections as you. However, this could have negative consequences for their own credit rating if the debt isn’t repaid in full and on time.

 

You do not have to pay any advice or application fees to apply for Breathing Space.

 

Drawbacks of Breathing Space

 

If you do not continue to make your full contractual debt repayments, your lenders are likely to report this to the credit reference agencies. This will usually have a negative affect your credit score and affect your ability to borrow in the future.

 

You may need to open a new bank account, especially if you owe money to your existing bank account provider.

 

Existing credit lines that you rely upon (like your overdraft) may be removed. You are also not allowed to borrow more than £500 during the 60-day period.

 

You can only use Breathing Space once within a 12-month period, so it’s important to be ready to take expert debt advice and implement an effective debt solution.

 

Only the debts that you have reported to your adviser are included. However, you can later add a debt that you had previously forgotten for the remainder of the 60-day period.

 

You must include all of your eligible debts within the process. You cannot to choose to leave a particular debt out. If you have a guarantor loan your guarantor will not receive any protection from your Breathing Space and will remain liable to make the payments if you do not.

 

Do I Qualify?

 

Before you can access Breathing Space an approved debt adviser must assess whether you meet the eligibility criteria.

 

You must be unable to repay some (or all) of your debts when they are due to be paid. You must need time to receive expert debt advice and be prepared to enter a debt solution (if this is necessary to bring your personal finances under control).

 

You do not qualify if you are currently an undischarged bankrupt, or if you’re currently using an IVA or Debt Relief Order. You also do not qualify if you have already used Breathing Space within the past year.

 

During the 60 days you must continue to pay ongoing liabilities like your mortgage, rent, council tax, insurance policies, and utility bills. You must also tell your adviser about any changes to your circumstances and respond promptly to their queries. If you don’t, your adviser may decide that you’re no longer eligible and cancel your Breathing Space.

 

Included Debts

 

Most types of debt are covered by the Debt Respite Scheme. They include:

 

 

Debts that have been passed to debt collection agencies (or sold to debt purchasers) are still covered by Breathing Space.

 

Excluded Debts

 

Breathing Space does not cover payments (or arrears) for maintenance. It also doesn’t cover Child Support Agency or Child Maintenance Service liabilities.

 

No protection is provided for magistrate’s court fines, criminal confiscation orders, fraudulent debts, or debts related to some types of personal injury claims.

 

You will receive no protection in respect of budgeting loans, crisis loans, Universal Credit advances. Student loans are also excluded.

 

Mental Health Crisis Breathing Space

 

If you’re receiving treatment for a mental health crisis you may qualify for a longer period of Breathing Space. This protection will remain in place throughout your treatment (and for a further 30 days afterwards).

 

There is no restriction on how often this process is used and you can choose to appoint someone else to deal with the debt adviser on your behalf.

 

Breathing Space and Debt Solutions

 

There is scope for Breathing Space to make arranging your debt solution much less stressful. This is especially true if you’re already in arrears and are worried about creditor legal action or bailiff visits.

 

Examples of how it could help include:

 

  • Putting legal action and interest charges on hold while you make repayment proposals to your creditors via a debt management plan. This could also reduce creditor contact and the associated anxiety that this can cause.

 

  • Putting legal action and creditor contact on hold pending the outcome of an IVA application.

 

 

How to Apply

 

Only specialist debt advisers can arrange Standard Breathing Space for you. We advise you to contact the Money Advice Service to be connected with a suitable adviser.

 

Bright Oak expects to begin directly providing Standard Breathing Space services in the near future.

 

To learn more about submitting an application for Mental Health Crisis Breathing Space, please visit the Money & Pensions Service.

 

Get Debt Advice

 

For expert debt advice, please contact us today.

 

 

Author: Andrew Graveson

Qualified Debt Adviser & Bright Oak’s Founder

 

Page Created: 27/05/2021

 

 

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