New ‘Breathing Space’ scheme introduced

Wednesday 19 June, 2019 Money Advice

A new Breathing Space scheme will protect individuals with problem debt, with those in mental health crisis to get further protections while they receive treatment.

  • new Breathing Space scheme will protect individuals with problem debt by freezing interest payments and halting enforcement action from creditors
  • those in mental health crisis will see further protections while they receive treatment
  • scheme will cover wide range of debts, including local and central government debts

Individuals and families struggling with problem debt will be given extra help and time to get their finances under control, City minister John Glen announced today.

The new plans will see the introduction of a 60-day Breathing Space period from 2021, where people with problem debts will be protected from enforcement action from creditors and will see their interest frozen.

During this period individuals must engage with professional debt advisers, so they can find a long-term solution to their debts and get back on track with payments.

As part of these plans, and to acknowledge the links between problem debt and mental health issues, the government is also confirming that individuals receiving NHS treatment for mental health crisis will not need to seek debt advice during the 60-day period. This will remove a key barrier to access for this group. They will continue to receive the same Breathing Space protections, which will last for the whole of their treatment.

Helen Undy, Chief Executive of the Money and Mental Health Policy Institute, said:

This scheme could genuinely save lives. Everyone experiencing a mental health crisis should have the opportunity to recover free from escalating debt fees, charges and the threat of bailiffs arriving at their door.

We are delighted that the government acted on our call to protect people from being hassled about debts while they’re receiving crisis care, and we look forward to working with ministers to put these plans in place over the coming year.

Phil Andrew, CEO of StepChange Debt Charity, said:

People looking for a sustainable way to repay their debts have traditionally had little protection, leaving them vulnerable to inconsistent approaches by different creditors that can harm their chances of recovery – something as a debt charity we’ve long felt needed reform.

Breathing Space and statutory debt repayment plans will fundamentally improve how people seeking to repay debt are treated, putting them in a far less precarious position. We’re particularly pleased to see the Government’s confirmation that debts owed to government itself will be included in the scheme.

Accessing Breathing Space through debt advice also adds a valuable incentive to help ensure more people in debt get the support they need.