Since the pandemic threw the country into chaos, many of us have experienced the financial fallout. The cost of living has soared, and rising energy and food prices have stretched families to breaking point. Realising that something had to be done to help people manage their debts, the government introduced The Breathing Space Scheme.
The government launched Breathing Space in May 2021 to offer a short respite for people struggling with debt. This window stops creditors from chasing you for unpaid debts, giving you time to seek help and make an affordable arrangement. During Breathing Space, companies cannot proceed with enforcement action against you or add interest to your debt.
You may also hear about The Breathing Space Scheme called The Debt Respite Scheme.
How the Breathing Space Scheme Works
Breathing Space offers two types of debt windows – The Standard Scheme and the Mental Health Crisis Breathing Space.
Standard Breathing Space
This is open to everyone and provides a 60-day period during which creditors must pause enforcement actions. No additional charges or interest can be added to your debts during this time. Creditors are prevented from contacting you during the 60 days. During your Breathing Space period, you can work with debt charities such as StepChange to create a manageable plan to deal with your debts. StepChange offers various options to help you choose the right solution.
Mental Health Crisis Breathing Space
If you are undergoing treatment for a mental health crisis, your medical team may refer you to the Mental Health Breathing Space Scheme. This version offers the same protection as the standard scheme but lasts for the duration of your treatment plus an extra 30 days. It is designed to ease the burden of worrying about your debts while you are being treated or recovering from a crisis.
Who Is Eligible for Breathing Space?
To be eligible for the Breathing Space Scheme, you must:
- Live in England or Wales.
- Owe a qualifying debt. Qualifying debts typically include credit cards, personal loans, overdrafts, utility bill arrears, and more.
- Not have used the Standard Breathing Space in the last 12 months (no such restriction applies for Mental Health Crisis Breathing Space).
How To Apply
You can apply for Breathing Space through an authorised debt adviser, such as those from organisations like Citizens Advice or StepChange. The adviser will assess your financial situation, confirm your eligibility, and start the Breathing Space period.
Benefits of Breathing Space
- Immediate Relief: By pausing enforcement actions and freezing interest, you receive immediate financial relief and can focus on addressing your debts without pressure from creditors.
- Mental Well-being: Financial stress contributes to mental health issues. By providing a window of respite, Breathing Space helps to ease pressure and aids recovery.
- Support: The scheme helps you get professional debt advice and understand the right debt solution for you.
While the Breathing Space Scheme is widely praised, it isn’t long enough for most people and doesn’t include secured debts like mortgages. Mortgage debt is one of the most worrying debts, as it brings with it uncertainty and insecurity.
Despite these criticisms, the Breathing Space Scheme offers a lifeline for people struggling with debt. It provides much-needed support and helps people regain control of their finances and stop worrying about debt.
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