Millions in loans and credit card debt to get two-month ‘breathing space’ from today
MILLIONS struggling with problem debts can get a 60-day "breathing space" against prosecution and bailiffs from today.
Hard-up Brits across England and Wales can now apply for the two-month buffer, designed to give people time to get long-term debt help.
The scheme, which was first announced in 2019, covers a wide range of debts including council tax arrears, personal tax debts and benefit overpayments, as well as credit cards and loans.
Households will also see their debts frozen, meaning creditors can't add interest to it during this time as well.
During the breathing space period, debtors must work with professional advisers to get back on track with repayments.
Only those who are receiving NHS treatment for mental health when they apply to the scheme will continue to be protected even if they don't seek professional debt advice.
What is 'breathing space'?
If you apply for "breathing space
Interest on your debt will also be frozen.
The government scheme, run by the Insolvency Service, will roll out from today (May 4).
The scheme aims to give hard-up Brits time to seek long-term debt advice.
You can only apply for breathing space once in a 12-month period.
Contact a debt adviser to apply for the two-month buffer.
If you're eligible, your debt adviser will put an application in to the Insolvency Service on your behalf.
You must keep up with your debt repayments during the 60-day period where you can - otherwise your breathing space may be cancelled.
If you don't keep up with your debt repayments where possible over the breathing space period, it may be cancelled.
It is estimated that the scheme will help over 700,000 Brits to get professional help in its first year, increasing to 1.2million a year by the 10th year.
Of this, 25,000 to 50,000 people in mental health crisis treatment are also expected to benefit every year.
You can only apply for breathing space once every 12 months, according to Citizens Advice.
Recently, households have been pushed further into debt by around £2,000 on average due to the Covid crisis.
StepChange warned about a "personal debt tsunami" worth £6billion due to the pandemic hitting 4.6million households in June last year.
It estimated that 1.2million people have fallen behind on utility bills, 820,000 on council tax and 590,000 on rent.
Who is eligible for breathing space?
The s website says “most debts” are covered under the breathing space scheme, which you can apply for from today (May 4).
These debts include:
- Credit cards
- Store cards
- Personal loans
- Pay day loans
- Overdrafts
- Utility bill arrears
- Mortgage or rent arrears
Government debts like tax and benefit debts are also likely to qualify too, according to the Insolvency Service.
Check with a debt adviser to see if you're eligible.
How to cut the cost of your debt
IF you're in large amounts of debt it can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money
Work out your budget - by writing down your income and taking away your essential bills such as food and transport
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum - If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts - If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay
Get advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
Joint debts are also included under the scheme, even if only one person applies for the help.
Guarantor loans are also covered, but the guarantor will have to put in a separate application if they want to apply too.
If you incur a new debt during the 60-day buffer then it won’t be protected under the scheme.
Who’s not eligible for breathing space?
There are a number of debts that you won’t be able to get breathing space for. These include:
- Secured debts
- Debts incurred after your breathing space started
- Debts from fraud
- Court fines (but penalty charge notices like parking tickets apply)
- Child maintenance debts or money owed under an order from family court proceedings
- Debts from a confiscation order
- A crisis or budgeting loan
- Student loans
- Advance payments of Universal Credit
- Council tax debts that are not due yet
- Personal injury damages
You also can’t apply for breathing space if you have a debt relief order, individual voluntary arrangement or have filed for bankruptcy.
Once your breathing space ends, you won’t be able to apply for another one for the next 12 months.
How do I apply?
You can only apply for breathing space if you seek debt advice from a debt adviser.
Organisations like or the will be able to help you.
For example, you can call StepChange on 0800 138 1111 or fill out an on its website.
Your debt adviser will check if you’re eligible for the scheme, and they will submit the application on your behalf to the Insolvency Service.
You will need to give the following information to your debt adviser :
- Full name
- Date of birth
- Home address
- Details of debts owed
- Name and contact details for the creditor
You won’t be able to take out a new loan of over £500 during the buffer period, according to Citizens Advice.
If you’re receiving help for a mental health crisis, then you can apply to the scheme, or someone else - such as a social worker or mental health nurse - can apply on your behalf.
Your breathing space period will then last for as long as you are receiving crisis treatment, plus another 30 days after your treatment ends.
You don’t need to receive debt advice during your breathing space period, and there’s no limit on the amount of times you can apply for the help if you’re being treated for a mental health crisis.
What happens during breathing space?
A breathing space period will last up to 60 days, and during this time, no interest or fees will be added onto your debts.
You will also be protected against debt collectors and bailiffs.
StepChange says that you must keep up with regular debt repayments where you can, continue to seek debt advice, keep debt advisers updated on your progress, and avoid taking out more credit during the buffer period.
Your debt adviser will review your breathing space midway through the 60-day period (between day 25 and day 35).
If your debt adviser thinks you’ve not met all your obligations - for example, if you've failed to get help or repay your debts where you can - your breathing space period may be cancelled.
After your breathing space ends, creditors can start contacting you again about your repayments.
They will also be able to start taking action against you again.
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