Debt Respite Scheme
The Government has launched an enhancement to the Breathing Space scheme for debtors which will come into place on May 4th this year. It is similar to the informal Breathing Space we give to customers who approach a Debt Management Company (DMC) for help with their debts. The new Breathing Space will give debtors a legal right to protection from creditors for a certain period of time.
There will be a standard 60 day Breathing Space which can be extended if required. As the original creditor you will receive an electronic notification of Breathing Spaces that apply to any of your debtors. At this point all recovery action must be halted; including any correspondence, phone calls or visits. You will also not be able to carry out any action to enforce court judgements you may have been awarded. Although you as the creditor will be informed, if you have instructed a Debt Recovery Agency such as ourselves, we will not receive any notification so it is important that you let us know about any Breathing Spaces relating to cases which you have referred to us.
As well as a Standard Breathing Space there is also a Mental Health Crisis Breathing Space which lasts as long as the person’s treatment plus for 30 days afterwards. This is not for ongoing mental health issues - only for those who are receiving crisis treatment.
To be eligible under this scheme the debtor will have to have sought advice about their debts from an authorised Debt Management Company. If they have ready assets that could be sold they will be expected to sell these to settle their debts before being allowed a Breathing Space. You will be able to continue to receive payments on any payment plan but not to add any late fees or interest which may be accruing.
The Breathing Space will be reviewed half way through and it may be cancelled at any time. At this point you can recommence all action to recover your debt. You will be notified when the Breathing Space has ended however please bear in mind that it can be extended beyond the initial 60 days.
The key points to remember are that you must comply with the Breathing Space or you may become liable for your debtor’s costs. You must inform us about any debtors who have entered a Breathing Space so we can halt all recovery action being taken on your behalf. Please note that you will be responsible if these terms are breached or we breach them on your behalf because we have not been informed by you of a Breathing Space.
Further information can be found here