Debt Relief Program Orientations (Breathing Space)
The Debt Respite Scheme (Breathing Space) guide goes into effect on May 4, 2021. It gives a person with a debt problem the right to legal protection against their creditors.
The Plan will protect certain debtors from their creditors when they have problems with their debt. It offers two types of breathing space:
- A standard breathing space; and
- A respite in the event of a mental health crisis.
Standard breathing space
Standard respite is available for anyone with debt problems. It gives them a 60-day moratorium on legal proceedings brought against them by creditors. During the 60 day period, the person will benefit from a freeze on interest, fees, even contacts and most enforcement actions.
Respite space in the event of a mental health crisis
Mental health crisis respite is only available to a person receiving treatment for a mental health crisis and lasts as long as the treatment, plus 30 days from the end of treatment.
How are creditors affected by the Debt Respite Scheme?
As a creditor, if you are informed that a debt owed to you is in respite, you must stop all action until the end of the respite and grant the person the relevant protections to which they are entitled. An electronic or postal notification will be sent to you and will confirm the start date of protection. Although the Insolvency Department owns and operates the electronic department and a private registry, if you have any questions about the notice that was sent to you, you should contact the debt counselor who sent the notice.
Only debt advice providers (who are licensed by the Financial Conduct Authority) and a local authority can start a respite. Debt counseling providers are responsible for administering respite and are the point of contact.
A debtor who cannot or is unable to repay their debts may request standard relief. All applications will be considered but cannot be accepted in all circumstances. If someone has assets or could pay their debts with budget support, they may not be able to get a break.
In order to provide respite, a debt counselor must confirm that the debtor is:
- An individual
- has an eligible debt to a creditor
- Usually lives or resides in England or Wales
- Cannot be an undischarged bankrupt, have a Debt Relief Order (DRO) or be in an Individual Voluntary Arrangement (IVA)
- Not already having a respite or having had one in the past 12 months. However, there are no limits to the provision of breathing spaces in the event of a mental health crisis.
A respite is not a holiday from payment for the debtor and any debt or liability must always be discharged, although no action can be taken by a creditor during this period if he or she defaults. If a debtor does not meet its obligations, the respite can be canceled by the debt counselor.
Once a respite ends, creditors can resume charging interest and charges, can initiate enforcement action, or initiate or continue legal proceedings, unless the debtor has entered into an alternative debt solution. such as a DRO or an IVA.
Relevant legislation is the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 and further guidance is available on the government website. here.
If you need help collecting a debt, please contact our Debt Collection team on 023 8032 1000 or contact us here.