If you are an individual, Oliver Elliot can help you address your concerns and advise you about help available from The Debt Respite Scheme (Breathing Space).
Business and Debt Help Schemes
The Debt Respite Scheme (Breathing Space) will give someone in problem debt the right to legal protections from their creditors.
There are two types of breathing space: a standard breathing space and a mental health crisis breathing space. Where there is a difference between them, we’ll refer specifically to either a standard breathing space or a mental health crisis breathing space.
A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
The legislation this guidance references is The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. This guidance is intended to support creditors in understanding the regulations.
Eligibility For The Debt Respite Scheme
To be eligible for a Breathing Space you must be an individual:
- Debtors can only access a breathing space by seeking debt advice from a debt adviser.
- Anyone who cannot or is unlikely to be able to repay their debts can apply to a debt adviser for a standard breathing space.
- Although all applications must be considered, the debt adviser might decide a breathing space is not appropriate for a debtor.
Before a debt adviser can start the breathing space, they must confirm their client is eligible and meets all the conditions. These are that the debtor must:
- be an individual
- owe a qualifying debt to a creditor
- live or usually reside in England or Wales
- not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply
- not already have a breathing space or have had a standard breathing space in the last 12 months at the time they apply
The debt adviser must also be satisfied that their client meets both of the following conditions:
- their client cannot, or is unlikely to be able to, repay all or some of their debt
- a breathing space is appropriate for their client
Debts Available For The Debt Respite Scheme
Debts included in a breathing space must be qualifying debts. Debts are any sum of money owed by the debtor to you, while liabilities are any obligation on the debtor to pay money to you. Most debts are likely to be qualifying debts. These will include:
- credit cards
- store cards
- personal loans
- pay day loans
- utility bill arrears
- mortgage or rent arrears
Government debts like tax and benefit debts are all likely to qualify, unless they are included in the list of excluded debts.
Joint debts can be included in a breathing space, even if only one person applies for a breathing space. The joint debt would become a breathing space debt, and you must apply the enforcement action protections to the other people who owe that debt to you. You are still able to charge the other people interest or fees, and the breathing space does not affect the other people’s debts and liabilities in their own names.
While guarantor loans can be included in a breathing space, the protections do not extend to the guarantor. The guarantor can apply for their own breathing space, if they’re eligible.
Qualifying debts can include any that the debtor had before the Breathing Space legislation came into force on 4 May 2021.
New debts incurred during a breathing space are not qualifying debts. Neither are new arrears on a secured debt that arises during a breathing space.
Application For The Debt Respite Scheme
To apply, a debtor must provide their debt adviser with their:
- full name
- date of birth
- usual residential address (in some very limited circumstances, this address might be withheld from the breathing space register and any notification to creditors)
details of the debts that they owe, including the type of debt they owe
- the name and contact details for the creditor
- if relevant and known, the name and contact details for any agent appointed by the creditor
If the debtor is a sole trader and has business debts to include, they must also provide:
- their trading name or names
- any business address
Debt advisers will also try to find out and provide extra information that might help you identify the debtor or their debt. This might include:
- the debtor’s previous names and addresses, if they’ve recently changed
- details of any amounts or references relevant to the debt (such as the debtor’s National Insurance number, if the debt is a government debt, or a credit card number)
However, this information is not required before a debt adviser can start a breathing space.
A debtor must have at least one qualifying debt owed to a creditor, and this must be included in the application. The debtor must tell the debt adviser about all of the debts they know about and give them the contact details they have for each creditor. If they know about a debt collection agent acting on a creditor’s behalf, they might also give the debt adviser those details. This does not change the legal standing of either the agent or the creditor.
How The Debt Respite Scheme Starts
A breathing space will start the day after the debtor’s details are put onto the breathing space register.
If you receive electronic notifications about the start of a breathing space, you should receive a notification the same day that details are put on the register. It’s likely this will be the day before the breathing space starts. If you receive notifications by post, it’s likely you’ll receive it after the breathing space has started.
Once a debtor’s details have been put onto the register, you’ll receive a notification, telling you the breathing space start date and details of your qualifying debt (if the debt adviser had those details). If the debt adviser is aware that you are owed more than one qualifying debt, you will receive a notification for each debt. ‘Taking action on the notification’ has advice on what to do if you are not sure which debt or debts the notifications relate to.
You can receive notifications by:
- electronic communication (either a notification directly from the electronic service or an email). We can only send electronic communications to you if you opted in through the electronic service
- someone leaving a copy of the notification at your address
The regulations consider that you’ve received:
- an electronic notification on the day it was sent
- a postal notification 4 business days after the notification was posted
- a notification left at your address on the day it was left
How The Breathing Space Ends
A standard breathing space ends:
- 60 days from the date it started
- the day after a debt adviser or a court cancels it
- if the debtor dies during the breathing space period. In this case, the breathing space ends on the day after the debtor died
How Is Creditor Enforcement Action During A Breathing Space Stopped?
Once a breathing space has started, you or anybody acting on your behalf must not take any enforcement actions against the debtor or anyone who is jointly liable with them for a breathing space debt.
Enforcement action is when you try to:
- collect or enforce a breathing space debt, including where this is done by any agent you’ve appointed. This includes the Department for Work and Pensions (DWP) where they are
- collecting a breathing space debt on your behalf through third party benefit deductions (not including Universal Credit or an ongoing liability payment). It does not include an
- existing attachment of earnings order made before the start of the breathing space, which may continue
- apply to DWP for a new third party deduction to be taken from an individual’s benefit payments
- try to enforce a judgment or order issued by a court or tribunal, before or during the breathing space, without the court’s permission
- enforce your security over a breathing space debt
- obtain a warrant or writ
- get or seek a liability order
- sell or take control of the debtor’s property or goods. If a bailiff or enforcement agent has taken control of any goods by removing them and securing them elsewhere before a breathing space started, the goods may be sold during the breathing space and the costs of the sale deducted from the proceeds. However, fees accrued during the breathing space for storage of those goods cannot be charged either during the breathing space, or after it ends
- start any action or legal proceedings (including bankruptcy petitions) against the debtor
- make an application for a default judgment for a claim for money against the debtor
- take steps to install a pre-payment meter or use a pre-payment meter already installed for the supply of gas or electricity, to collect payment for a debt in the breathing space, unless the debtor has already provided their consent to do so, before the breathing space starts
- take steps to disconnect a debtor’s premises from a supply of gas or electricity, unless they have taken that supply illegally
- serve a notice to take possession of a property let to the debtor on the grounds of rent arrears due up to the start of the breathing space; or take possession of a property let to the debtor having served such a notice prior to the start of the breathing space
- contact the debtor about the enforcement of a breathing space debt. The only exception to this is where you are required to contact or engage with the debtor under the Consumer Credit Act 1974, or by the FCA Handbook
Firms that report to credit reference agencies if payments are received or not can keep doing this during a breathing space. But there should be no automatic effect on a debtor’s credit file triggered by starting the breathing space, and no automatic flag or code that will stay on the file after the breathing space has finished.
What Happens If A Bankruptcy Petition Has Been Issued?
Any court that receives notification about a breathing space debt where a bankruptcy petition has started, must stop the bankruptcy proceedings, until the breathing space ends or is cancelled. Other court proceedings about the debt (other than enforcement of court judgments or orders) can continue until the court or tribunal makes an order or judgment.
Mental Health Breathing Space
The government committed to develop an alternative route to access the protections for people receiving mental health crisis treatment, so that they do not have to access debt advice first. If an Approved Mental Health Professional (AMHP) certifies that a person is receiving mental health crisis treatment, the AMHP’s evidence can be used by a debt adviser to start a mental health crisis breathing space.
In addition to the debtor, the following people can apply to a debt adviser on behalf of a debtor for a mental health crisis breathing space:
- any debtor receiving mental health crisis treatment
- the debtor’s carer
- Approved Mental Health Professionals
- care co-ordinators appointed for the debtor
- mental health nurses
- social workers
- independent mental health advocates or mental capacity advocates appointed for the debtor
a debtor’s representative
The debtor must still meet the same criteria and conditions for a standard breathing space, but they must also be receiving mental health crisis treatment at the time that an application is made. A debtor who has had a standard or mental health crisis breathing space in the last 12 months may be eligible for a mental health crisis breathing space.
There is no limit to how many times a debtor can enter a mental health crisis breathing space.
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Disclaimer: Debt Respite Scheme (Breathing Space)
This page: Debt Respite Scheme (Breathing Space) is not legal advice and should not be relied upon as such. This article Debt Respite Scheme (Breathing Space) is provided for information purposes only. You can Contact Us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.
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