The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 took effect on 4 May 2021. The scheme aims to help millions of people in debt crisis get their finances under control by giving them a period of time, or ‘Breathing Space’, to engage with a debt adviser to sort out their money worries.
Under the scheme, those struggling with problem debt will be given a 60-day respite, during which interest and charges on their debt will be frozen and enforcement action from creditors will be halted. Those individuals who also receive mental health crisis treatment will benefit from the same protections until that treatment is complete. Throughout the respite period, individuals will also receive professional debt advice to help them find a long-term solution to their financial struggles.
It should be noted that Breathing Space is a different form of support to the recent Covid-19 payment deferrals provided by lenders. Breathing Space is not a payment deferral – if customers are able to pay some of their debts, it is in their best interests to do so. Further, any missed payments will continue to be reported on their credit file.