The Government has published draft regulations titled The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. The new Breathing Space scheme, originally outlined by Government in February 2020 following campaigning from the debt advice and wider sector, will go live on 4 May 2021.
The 60-day breathing space period will see enforcement action from creditors halted and interest frozen for people with problem debt. During this period, individuals will receive professional debt advice to find a long-term solution to their financial difficulties. Those people receiving mental health crisis treatment will receive the same protections until their treatment is complete.
Peter Tutton, StepChange head of policy, commented:
“We look forward to working on the detail of implementation constructively with the government, to ensure that it fully meets the policy objectives of getting more people to the debt advice that they need, and then giving them a period of calm in which to begin the process of reaching a suitable solution to their problems without fear, harassment, intimidation or escalating cost.
“There is still more that government can do to help support the increasingly enlightened approach to debt that the Breathing Space scheme augurs – in particular, by ensuring that government’s own debt management practices are improved so that they don’t lag behind those in the regulated consumer sector.”
Joanna Elson OBE, chief executive of the Money Advice Trust, commented:
“Breathing Space will provide the time and protections that people in financial difficulty need to begin to deal with their debts, and gives us a powerful tool to incentivise people to seek free debt advice. We welcome the government’s commitment to launch the scheme on 4th May 2021, and look forward to continuing to work with the Insolvency Service on its implementation.
“As households deal with the economic and financial impact of the Covid-19 crisis, the benefits that Breathing Space will bring cannot come soon enough. We now need similar clarity on the timetable for the introduction of statutory debt repayment plans – as well as urgent action to reform government debt collection practices – to keep up the welcome progress on this agenda.”