The controversial Breathing Space policy comes into effect from next Tuesday, May 4, and a charity is admitting it is not a “temporary fix to keep creditors at bay.”
The new Debt Respite Scheme - also known as Breathing Space - will give someone with 'problem debt' the right to legal protections from being chased up by creditors. As this applies to the rental sector, it is likely to protect tenants from being chased up by landlords or their letting agents.
The new details as set out on the Gov.uk website say there will be two types of breathing space - a standard breathing space and a mental health crisis breathing space.
Many landlords have expressed concern that the new scheme, added to restrictions already in place in terms of collecting tenant arrears, means that they could lose further income.
However, Lorraine Charlton - a debt expert at Citizens Advice - says of tenants and others likely to take advantage of Breathing Space respite: “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.”
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. Individuals can apply through a debt adviser for 60 days’ Breathing Space. They must continue to engage with your debt adviser and not take out any new borrowing over £500 in this time.
They are also expected to continue to make certain types of payments, including ongoing housing costs, utility bills, and taxes. Interest and fees will be paused on debts included in Breathing Space while these conditions are met.
Most Breathing Space options can be used only once in a 12 month period by any individual. However, if individuals are being treated for a mental health crisis, a separate version of the scheme applies.
An approved mental health professional - not just a GP - will need to confirm they are receiving crisis care. The individual 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 they’re receiving crisis treatment, plus 30 days. A nominated person will need to keep in touch with the debt adviser to update them about your ongoing treatment.
However, in this kind of Breathing Space the individual won't need to receive debt advice - and people can apply for this type of Breathing Space more than once a year.
For both types of Breathing Space, the individual must live in England or Wales and not currently be in another formal debt solution - like a Debt Relief Order, Individual Voluntary Arrangement or bankruptcy.
They will also need to owe at least one ‘qualifying debt’ - this includes rent arrears and council tax arrears. Court fines, Universal Credit advance payments and student loans do not count as ‘qualified debts’.
You can see more details about Breathing Spaces here.
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