Debt Respite Scheme (Breathing Space)

The Debt Respite Scheme (Breathing Space) came into force on 4 May 2021 giving greater protection to debtors dealing with problem debt.

Creditors need to be aware of the scheme to ensure they do not fall foul. Creditors must ensure that they apply all the breathing space protections for a debtor after they are notified about a breathing space. If they do not, any action taken by them will be null and void and may give rise to a liability for the debtor’s costs.

The scheme provides for two types of breathing space:

• Standard breathing space; and,
• Mental health breathing space.

Standard Breathing Space

This type of breathing space is available to anyone in debt and provides debtors with protection from their creditors for up to 60 days. The sort of protections include:

• Pausing most enforcement action;
• Pausing contact from creditors; and,
• Freezing interest and charges.

Mental Health Breathing Space

This type of breathing space is only available to someone who is receiving mental health crisis treatment. It gives stronger protections than the above and lasts as long as the person’s mental health crisis treatment plus a further 30 days.

Impact for Creditors

Where a creditor is notified that a debt owed them is in breathing space, they must immediately stop action and apply protections.

The protections should be applied as soon as possible and include:

  1. Identifying the debt;
  2. Freezing any interest, charges, fees and penalties relating to the debt;
  3. Stopping any enforcement action (and informing any enforcement agents); and,
  4. Ceasing from contacting the debtor (unless permitted to do so by the Court).

The protections apply throughout the breathing space period.

End of Breathing Space

At the end of a breathing space creditors will be sent a notification. It will tell them the date the breathing space ended. If the breathing space was cancelled, the notification will also tell a creditor the reason why it was cancelled.

If you would like to know more about the debt respite scheme please contact Aimée Redican by email: aredican@keelys.co.uk or phone: 01543 420495

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