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Breathing Space – Understanding Your Debt Respite Scheme Options

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breathing space scheme

Debt and money issues are known triggers for poor mental health. According to a survey by the Money and Mental Health Policy Institute, about 46% of individuals who have debt are also facing mental health challenges.

Added to this, people who are facing mental health issues are more vulnerable to incurring debt problems.

The reality of debt in the UK cannot be ignored. UK households’ average personal debt comes down to £65,529, while the average personal debt for adults is £34,597.

Further statistics indicate that about 24.60% of British consumers rely on credit cards to fund their cost of living.

Mental health crisis treatment and getting debt advice are vital components of solving the mental health crisis associated with financial burdens.

One avenue where both debt advice and financial reprieve can be found is the Breathing Space Scheme.

In this article, we look at what this breathing space debt scheme entails. We also review how, in some cases, together with mental health treatment, it can reduce the stress that individuals are experiencing due to debt.

When Was The Breathing Space Scheme Introduced, And What Is It’s Purpose?

Individual Voluntary Arrangement IVA

Breathing Space is a debt respite scheme established on 4 May 2021 and provides debt protection for individuals who reside in England or Wales.

This scheme aims to protect those who need assistance to get debt advice and solutions on how to manage their debt best.

How Does The Breathing Space Scheme Work?

Enter your details for an IVA

The Breathing Space Scheme offers legal protection for up to 60 days. During this period, enforcement action will be paused, and interest and charges relating to debts will also be paused.

Two types of Breathing Space options are available: Standard Breathing space and Mental Health Breathing Space.

How Is The Standard Breathing Space Different From The Mental Health Crisis Breathing Space?

Standard Breathing Space can be summarised as the process where creditors would pause debt collections and any enforcement of debts. Additionally, creditors will pause interest and charges associated with eligible debts.

Mental Health Crisis Breathing Space, on the other hand, also protects from creditors, but with the difference that it pertains to people who are undergoing mental health crisis treatment.

Mental health crisis treatment can be classified as someone who is assessed, treated, or removed to a place of safety under the Mental Health Act 1983.

Other individuals who could qualify for Mental Health Breathing Space are those who are undergoing crisis, emergency, or acute care or those who are receiving treatment from specialist mental health teams.

Another difference between the Standard Breathing Space Scheme and the Mental Health Crisis Breathing Space Scheme is time.

The Mental Health Breathing Space Scheme remains valid for the duration of your mental health crisis treatment plus an additional 30 days.

Those who choose the Mental Breathing Space Scheme as an option do not need to receive debt advice, and they can request an individual to talk to a debt adviser on their behalf.

Additionally, you are not limited to how often you enter a Mental Health Crisis Breathing Space period.

If you had a Standard Breathing Space in the past year, you can still apply for Mental Health Crisis Breathing Space protection.

Who Is Eligible For Standard Breathing Space?

Together with residing in England or Wales, the criteria that needs to be met include:

  • Being unable to repay some or all of your debt;
  • Not being in a DRO or IVA;
  • Not being an undischarged bankrupt and
  • Not having had breathing space in the past 12 months.

If you wish to apply for the Standard Breathing Space, you must do so via an approved debt adviser. Your adviser will confirm that you will require time to receive debt advice and likely pursue a debt solution.

Which Debts Qualify For Breathing Space?

enforcement agent iva

Most debts, such as arrears on essential and non-priority bills, are eligible for protection. Important to remember here is that all qualifying debts need to be included in your application.

If any debts are left out in your documentation, you can add them later, but they will only be covered for 60 days, only the remainder of the initial 60 days that you applied for.

Remember that some debts, such as magistrates’ court fines, student loans, and fraudulent debts, cannot be included in your application.

Speak with your adviser to clarify which debts you will still be liable for and need to keep on paying even if you get approved for the Breathing Space Scheme.

What Debts Qualify For A Mental Health Crisis Breathing Space?

Eligible debts for the Mental Health Crisis Breathing Space would be the same as for the Standard Breathing Space Scheme.

These include, among others, personal loans, mortgage arrears, payday loans, overdrafts arrears, and rent arrears.

Joint debts incurred can also be included. However, bear in mind that if only the joint debt of one partner enters the scheme, the other might still be liable for interests or fees.

Also, guarantor loans can be included in Breathing Space, but guarantors could still face action.

Applying For A Standard Breathing Space Scheme

bailiff debt advice

As mentioned earlier, debt advisers will be the first port of call for individuals who wish to apply for the Standard Breath Space.

Bear in mind that a debt adviser must consider all aspects before deciding whether an application for the Scheme would be suitable.

In some cases, it might be deemed that an individual has access to the necessary funds to pay off debt; in this case, there are better routes to follow than a Standard Breathing Space Scheme application.

However, if everything is to proceed, your chosen adviser will submit your application.

Applying For Mental Health Breathing Space

Due to the government taking action to protect people who are receiving mental health crisis treatment, these people will not be required first to get debt advice.

When an approved mental health professional can confirm that a person is receiving mental health crisis treatment, a debt adviser can use this proof to initiate a Mental Health Breathing Space.

Other parties that can liaise with debt advisers on behalf of a person receiving mental health crisis treatment include carers, mental health nurses, social workers or community mental health teams, and capacity advocates.

What Happens Next?

Once you have been approved for either the Standard or the Mental Health Breathing Space Scheme, you still need to consider some responsibilities.

Let’s review some key considerations.

Responsibilities while you are under the Standard Breathing Space protection

Stay in contact with your debt adviser for debt advice

You should stay in close contact with your debt adviser while your Standard Breathing Space remains active. This ensures that you keep getting the benefits you were approved for.

Be prepared that your debt adviser will do a midway review during the Standard Breathing Space period

Around the 25-35 day mark of your Breathing Space period, your debt adviser will conduct a review to ensure you meet all scheme conditions, such as informing your adviser if your financial situation has changed.

Continue to pay any debts that are not covered by the Standard Breathing Space Scheme

You are still liable to continue paying those bills the Scheme does not cover, so ensure you do not fall behind with any payments.

More considerations regarding the Standard Breathing Space Scheme

Does Breathing Space mean I can stop paying my debts for 60 days?

It is important to remember that the Standard Breathing Space Scheme is not considered a payment holiday. You will need to continue paying debts.

The benefit that Breathing Space has is that it offers a level of protection against interest, fees, and court action.

Therefore, you will not be completely exempt from payments, but during the 60 days, you are protected from creditor action.

What advantages do Breathing Space offer to individuals?

One way that Breathing Space can help alleviate debt concerns is that creditors are not allowed to add any interest or charges during these 60 days.

Any other debt relief order included in the Breathing Space may not be enforced during this time either.

So, the main advantage you are getting is to get your financials in order and get the debt advice you need to improve your financial situation.

Responsibilities while you are under the Mental Health Breathing Space protection

Your nominated point of contact will need to confirm every 30 days that you are still undergoing mental health treatment

This will ensure that you still enjoy the protection the scheme offers you during the available time.

Continue to pay your bills that are not covered by the scheme protection

As mentioned above, the Scheme is not a payment holiday. Therefore, you must ensure that bills not covered as part of the agreement are still paid.

What Happens If My Creditor Applies To The Court To Enforce Any Debt If I Am Still In My Breathing Space Period?

No court action may be taken during the Breathing Space time frame. Creditors who have started legal proceedings during this time cannot proceed with enforcement or issue any statutory demand.

Can My Breathing Space Be Cancelled At Any Point In Time?

During the midway review of a Standard Breathing Space, a debt adviser may find that the debtor did not follow the set-out obligations or if they have acquired a debt solution that covers all of their debt.

In the case of cancelling a Mental Health Breathing Space, a debt adviser could do so if there was any misleading information in an application.

On the other hand, a debtor may also request a cancellation.

What Happens After When Your Breathing Space Period Ends?

Once your Breathing Space time frame ends, creditors may contact you and continue with any debt collection.

This is why it is of the utmost importance to work closely with your debt adviser to have a plan to ensure you can avoid any legal prosecution and get rid of debt.

You must get solutions that will work for your financial situation and means in the long term, so use the 60 days you have to prepare for a debt-free future.

What To Expect If A Breathing Space Is Cancelled After Creditor Review

Another scenario to be aware of is that a Breathing Space could be cancelled following a review done as requested by a creditor.

A debtor will be notified of whether this change applies to all or just some debts.

Are Standard Breathing Space And Mental Health Breathing Space Protections Good Debt Respite Schemes To Consider To Improve Mental Well-being?

Breathing Space provides the opportunity to get debt solutions, confidential debt advice online, and temporary protection against enforcement action.

Together with getting mental health crisis treatment, the Mental Health Breathing Space can help an individual get a reprieve from debt commitments to focus on being supported by an approved mental health professional.

Overall, both Standard Breathing Space and Mental Health Breathing Space can improve well-being and mental health, reducing stress in individuals and allowing them to regain balance in their financial lives.

Getting Help From An Approved Mental Health Professional For Mental Health Crisis Treatment

Individuals must seek out assistance from approved mental health professionals if their emotional well-being is suffering due to debt.

Addressing a mental health crisis that is impacted by personal debts can be the start of getting back to both private and financial wellness.

Breathing Space & Mental Health Crisis Breathing Space – Conclusion

Both the Standard Breathing Space Scheme and the Mental Health Crisis Space Scheme benefit those needing a debt reprieve.

The Standard Breathing Space has the added benefit of getting debt advice, while the Mental Health Crisis Space Scheme can alleviate pressure due to mental health crises.

Speak to your debt adviser today if you would like to learn more about the Standard Scheme, or contact your approved mental health professional to assist you with your application to the Breathing Scheme.

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