Debt Respite Scheme
Many people are not aware of this important piece of legislation known as Breathing Space, officially called the Debt Respite Scheme, is a government scheme which could help relieve some of the pressures and stress caused by being in debt.
What is Breathing Space?
The Debt Respite Scheme, or Breathing Space aims to help relieve some of the pressure of dealing with your creditors, so you can focus on getting debt advice without worrying about being chased for payment or incurring extra charges.
This is a free scheme, launched by the Government and this begins today the 4 May 2021.
There are two types of breathing space Standard breathing space and a Mental Health crisis breathing space.
Standard breathing space
This is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. This may include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
A Mental Health crisis
This 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).
How could Breathing Space help you to deal with your debts?
Relieve some of the pressure of dealing with creditors and provide protection from interest and fees for its duration.
Give you time to get real debt advice and set up a solution to deal with your debts.
Who is eligible you must:
• Live in England or Wales
• Owe at least one qualifying debt to a creditor.
• any debtor receiving mental health crisis treatment.
And you must not:
• Been on the Breathing Space scheme in the past 12 months.
• Be on a debt relief order (DRO)
• Have an individual voluntary arrangement (IVA)
• Be subject to an interim order.
• Be an undischarged bankrupt.
If you are applying for a Mental Health breathing space following people can apply to a debt adviser on your behalf:
• 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
If you pass the eligibility checks, your creditors will not be able to add interest or fees to your debts, or take enforcement action, for 60 days. You must still to keep making your regular payments if you can afford to.
How do I apply for Breathing Space?
A breathing space can only be started by:
• a debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling.
• a local authority (where they provide debt advice to residents)
They will be responsible for the administration of a breathing space. They will liaise with the creditors (and appointed agents), and The Insolvency Service.
The Insolvency Service
Maintain and own the electronic service that debt advisers use to start the breathing space process, and the notifications to creditors during it. They also maintain a private register of the following:
• details of people whose debts are in a breathing space.
• the date a breathing space ended or was cancelled in the last 15 months.
You can only access a breathing space by seeking debt advice from a debt adviser such as Stepchange or CAB.
If you are unable to repay their debts can apply to a debt adviser for a standard breathing space the debt adviser might decide that a breathing space is not appropriate for you.
What is the process?
Apply
If you're eligible, your application will be submitted to the Insolvency Service who administer the scheme.
Once your application is submitted, your Breathing Space will begin within 2 working days.
During the first 20 days of the scheme, creditors are able to challenge your application for Breathing Space.
You can add a debt to Breathing Space after it has started as long as the debt existed before your Breathing Space began. For example, if a debt is added to Breathing Space on day 5, protection on that debt would last for 55 days. The clock for creditors to challenge the inclusion of a new debt restarts when the new debt is added, but this only applies for the new debt, with protection still in place for other debts.
After 30 days, your debt adviser will review your situation. In most cases, this will result in the scheme continuing for the full 60 days.
Remember it is never to late to seek help and advice if you are in debt, now is the time to seek help especially with this new piece of legislation which stops creditors taking action/enforcement action whilst you seek help.
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