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Breathing Space Scheme: Get The Time You Need To Deal With Your Debt

Breathing Space: Debt Respite Scheme - Get The Time You Need To Deal With Your Debts

 

What is Breathing Space?

Breathing Space (officially called the Debt Respite Scheme) is a government scheme available in England and Wales, which is designed to give you time to receive debt advice and find a solution to your debt problems.

Your creditors cannot add interest or fees to your debts, or take enforcement action, for 60 days.

You still need to keep making your regular payments if you can afford to.

There are two kinds of breathing space.

  • Standard breathing space is where most creditors will have to stop collection and enforcement of your debts. Creditors will also have to freeze interest and charges on any eligible debts.
  • Mental health crisis breathing space can provide extra protection for people who are receiving mental health crisis treatment.

 

This article covers:

Who is Eligible for Breathing Space?

What Are The Qualifying Debts for Breathing Space?

What Debts Are Excluded From Breathing Space?

How does the Breathing Space Scheme Work?

What is the Mental Health Crisis Breathing Space?

How to Apply for the Breathing Space Scheme

Applying for a Mental Health Crisis Breathing Space

 

Who is Eligible for Breathing Space?

To be eligible for Breathing Space you need to meet the following criteria:

  • live in England or Wales;
  • owe at least one qualifying debt / be unable to repay some or all your debts ‘as they fall due’;
  • not be in a Debt Relief Order, Individual Voluntary Arrangement or be an undischarged bankrupt; and
  • must not have had Breathing Space in the last 12 months, unless it was for a mental health crisis

In addition your debt adviser (who you need to apply to for breathing space) must agree that:

  • you need time to get debt advice; and
  • you are likely to enter a debt solution.

 

What Are the Qualifying Debts for Breathing Space?

The range of debts that qualify you for Breathing Space are quite broad:

Arrears on essential bills

You can normally include arrears on essential bills, including interest and charges that have been added. Examples include:

  • rent arrears;
  • mortgage arrears;
  • gas and electricity arrears;
  • water arrears;
  • hire purchase arrears;
  • council tax and business rates arrears; and
  • income tax and National Insurance arrears.
  • Credit cards

Non-priority debts

You can include all non-priority debts. Examples include:

  • mobile phone arrears;
  • credit cards and store cards;
  • bank overdrafts and bank loans;
  • loans to finance companies;
  • catalogues;
  • home-collected credit;
  • family or personal debts; and
  • mortgage shortfalls (money you owe if your house was sold for less than the outstanding mortgage).

You must include all eligible debts in your application.  

 

What Debts Are Excluded From Breathing Space?

  • magistrates’ court fines;
  • maintenance, Child Support Agency (CSA) and Child Maintenance Service (CMS) payments and arrears;
  • student loans;
  • budgeting loans and crisis loans;
  • money owed under a ‘criminal confiscation order’;
  • Universal Credit advances;
  • fraudulent debts;
  • debts resulting from certain personal injury claims against you.
  • business debts are not eligible for breathing space if your business is registered for VAT, or you are in a business partnership with anyone else, and the debt you have relates solely to the business.

 

How Does The Breathing Space Scheme Work?

  • Breathing Space starts once your application is submitted by your Debt Adviser to the Insolvency Service..
  • Once you are in breathing space, all creditors who have been included will be informed and they must stop any collection or enforcement activity.
  • During the first 20 days of the scheme, creditors can challenge your application for Breathing Space, as well as specific debts being included in the scheme.
  • You can add a debt to Breathing Space after it has started as long as the debt existed before your Breathing Space began..
  • During breathing space, you will need to try and decide on the best solution to deal with your debts
  • Breathing space will last for 60 days as long as you remain eligible. 
  • Once the breathing space ends, creditors will be able to collect the debt in the usual way.
  • Once you have had standard breathing space you will not be able to have another one for 12 months.
  • If any of the debts you have included in breathing space are in joint names, the other person named on the agreement will also be protected against enforcement action by your creditors.

 

What is the Mental Health Crisis Breathing Space

MHCBS is a debt respite scheme designed specifically for people receiving mental health crisis treatment.

A mental health crisis breathing space will provide you with the same protections as the standard breathing space.

  • A mental health crisis breathing space will last for the duration of your mental health crisis treatment plus 30 days.
  • Unlike a standard breathing space, people who wish to enter a mental health crisis breathing space will not need to receive advice and find a debt solution.
  • You can choose someone to talk to the debt adviser for you.
  • There is no limit to the number of times that you can enter a mental health crisis breathing space. You can also apply if you have had a standard breathing space in the last 12 months

Who can access Mental Health Crisis Breathing Space?

MHCBS is only available to residents of England and Wales with at least one qualifying debt to a creditor and if they’re receiving mental health crisis treatment. This means you are either:

  • Detained under the Mental Health Act (this is also known as being sectioned)
  • Removed to a place of safety under the Mental Health Act
  • Receiving crisis care in hospital or the community from a specialist mental health team such as the crisis team or the home treatment team

 

How To Apply For Breathing Space?

You will need to apply for the Breathing Space scheme through a debt adviser.

If the debt adviser feels the Breathing Space is right for you they will submit an application on your behalf to the Insolvency Service.

You can find a free debt adviser on the Money Advice Service website. 

To apply, you will need to provide the following information:

  • your name;
  • your date of birth;
  • your usual residential address; and
  • details of who you owe money to.

It would be useful to have as much information about each debt as possible. This includes:

  • the creditor’s address;
  • the account or reference number; and
  • details of any collection agency or enforcement agent collecting the debt.

It’s free to apply for ‘Breathing Space’, but some debt advisers may charge you a fee.

 

Applying for a Mental Health Crisis 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
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