Reside General Manager Toby Martin explains the impact of the government’s new debt relief initiative.
May was Mental Health Awareness Month, a very apt time for the government to launch the Debt Respite Scheme, also known as ‘Breathing Space’.
The purpose of the scheme is to provide a temporary period of respite from creditor action to help people in problem debt, for example a tenant in rent arrears, consider their options and engage with professional debt advice.
A Breathing Space moratorium will provide protections to those in problem debt by pausing enforcement action and freezing charges, fees and interest for up to 60 days. It is not a payment holiday and certain debts, including rent, are considered ‘ongoing liabilities’.
“Breathing Space will… encourage more people to seek advice, and when they do, there will be better protections in place to stop further harm and help recovery.”
Phil Andrew, CEO of StepChange Debt Charty
There is also an alternative way into the scheme for people receiving mental health crisis treatment. A mental health crisis moratorium has some stronger protections and lasts as long as a person’s mental health crisis treatment, plus 30 days.
A Breathing Space moratorium can only be accessed once every 12 months, but there is no limit to the number of times that an individual can enter a mental health crisis moratorium.
Anyone looking to start a Breathing Space must first seek advice from a debt service provider who is authorised by the FCA to offer debt counselling or a local authority. They will determine whether the individual qualifies for a Breathing Space and, if so, will contact any creditors to notify them of the moratorium.