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Breathing Space: What it is, and what you should know.

It has been a while in the making (as far back as October 2018), but the government has recently announced its plan to introduce a new measure to protect people in temporary financial difficulties from getting into further debt.

The measure is called Breathing Space, and it comes into action on 4th May 2021.

In a nutshell.

The new Breathing Space regulation (also known as the Debt Respite Scheme) will give people 60 days to seek debt advice from an FCA regulated provider, during which time creditors are legally obliged to freeze interest, charges, collections and enforcement action. It will cover almost all debts, even those to local and national government.

The measure will support people in managing short-term disruptions to their finances, and help them to get back in control of their situation.

There are two different types of ‘Breathing Space’ on offer:

  1. Standard Breathing Space – available to any person with problem debt.
  2. Mental health crisis Breathing Space – available those who have problem debt and who are receiving mental health crisis treatment from the NHS.

In order to access the scheme, you’ll need to get in touch with an FCA regulated debt advice provider, such as MoneyPlus Advice, and let them know about your situation. They will discuss your options, and let you know if the Breathing Space scheme is suitable for you. If it is, they will set it up then and there.

Things you should know.

  • The Breathing Space Scheme lasts for up to 60 days, and it can only be used once every 12 months (however, there is no limit for those who are experiencing a mental health crisis – more on this below).
  • Breathing Space is not a payment holiday; you must continue to pay your contracted payments and bills whilst the scheme is in place, otherwise it could be cancelled.
  • The chosen debt advice provider must make an entry on the ‘Breathing Space Register’. The register isn’t available for public viewing (unlike an Insolvency Register) – only creditors and FCA regulated companies will be able to view it.
  • Between day 25 and 35, you must review your financial situation with your chosen debt advice provider. Breathing Space can only be extended to 60 days if you contact your provider to make a review.
  • Debt advice providers cannot (and should not) charge you a fee for the advice they give you, or setting up the Breathing Space Scheme for you. If you end up choosing a more permanent solution with the provider, any normal fees will apply once the solution commences.

Additional protection for those with mental ill health.

For those experiencing a mental health crisis being treated by the NHS, the Breathing Space Scheme will be available to them for the full duration of their crisis treatment, plus a further 30 days. There will be no limit to how frequently the scheme can be accessed through this route so long as the person is under the care of an NHS crisis team.

Apply for Breathing Space with MoneyPlus Advice.

We’re an FCA regulated debt solutions provider, and we’ve been helping our thousands of customers to get their finances back on track for over 20 years.

If you think that Breathing Space could be right for you, get in touch with our expert team of Advisors today, and we’ll be happy to discuss your options with you.

We’ll walk through your current financial situation to understand your circumstances, and provide you with expert advice and guidance on all available options to help alleviate your debts. If Breathing Space is right for you, we’ll set it up then and there.

We’ll then contact you between day 25 and 35 to complete a financial review, which could mean that your Breathing Space is extended to 60 days, or we can set you up with a longer term solution to help with your debts.