What is the Debt Respite Scheme?
The Debt Respite Scheme provides legal protection to individuals from creditors to facing debt problems. This protection is called a ‘breathing space’.
There are two types of breathing space:
- A standard breathing space
- A mental health crisis breathing space
Both breathing spaces 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)
What is the difference between a Mental Health Crisis Breathing Space and a Standard Breathing Space?
Standard Breathing Space
Standard breathing space is available to everyone with debt problems. It gives them legal protection from creditor action for up to 60 days. This protection includes pausing most enforcement actions such as interest and charges on their debts from creditors.
Mental Health Crisis Breathing Space
A mental health crisis breathing space is exclusively for individuals undergoing mental health crisis treatment. It offers stronger protections than the standard breathing space and lasts for the duration of the treatment plus an additional 30 days, regardless of how long the treatment continues.
The legislation this guidance references is The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020.
Debtors’ eligibility for Standard breathing space
- Be an individual
- Owe a qualifying debt to a creditor
- Live or usually reside in England or Wales (a debt adviser must not start a breathing space for a client who lives or usually resides anywhere else)
- Not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply
- Not already have a breathing space or have had a standard breathing space in the last 12 months at the time they apply
Debtors’ eligibility for Mental Health Crisis Breathing Space:
- Must meet the eligibility criteria of a Standard Breathing Space, but they must also be receiving mental health crisis treatment at the time the application is made.
- If you have had a standard breathing space in the last 12 months, you may be eligible for a mental health crisis breathing space.
- There is no limit on how many times a debtor can enter a mental health crisis breathing space.
How to apply for a Standard Breathing Space?
- Debtors can only access a breathing space by seeking debt advice from a debt adviser.
How to apply for a Mental Health Crisis Breathing Space?
- When applying for mental health crisis breathing space debtors are not required to access debt advice first. If an Approved Mental Health Professional certifies that a person is receiving treatment, the debt advisor can start the mental health crisis breathing space.
In addition to the debtor, the following people can apply to a debt adviser on behalf of a debtor for a mental health crisis breathing space:
- Any debtor receiving mental health crisis treatment
- 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
What are Creditors responsibilities?
If you’re a creditor and are told that a debt owed by an individual to you is in a breathing space, you must stop all action related to that debt and apply for protections.
The electronic service will send you a notification to tell you about each debt owed to you in a breathing space and the date the breathing space started. Creditors need to make sure they apply the protections to these debts from the date set out in the notification.
If you’re a creditor the debt owed to you may be added to a breathing space later, because it is only identified after the breathing space has started.
For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email admin@audleychaucer.com or visit our Linkedin page.
GAINA KAPOOR
This information was correct as of July 2024
