New Scheme Announced for Individuals with Debt Problems.Posted: May 5, 2021

The Government has announced a new scheme to help individuals with debt problems. The scheme is described as ‘Breathing Space’ and comes into effect on 4 May 2021.

The term ‘Breathing Space’, for a change, is a good one, in that it gives those facing financial difficulties space to receive debt advice, or mental health crisis treatment, without mounting pressure from creditors or amassing further debts.

Individuals will be given legal protection from their creditors for 60 days, with most interest and penalty charges frozen and enforcement action halted. They will also receive professional debt advice to prepare a plan which helps to get their finances back on track.

There is additional protection for those who are suffering a mental health crisis, with the breathing space lasting for the full duration of their crisis treatment plus another 30 days.

The Breathing Space scheme can be accessed by contacting a professional debt advisor. Details of these can be found here, https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator. The providers are mainly debt charities.

Clearly, this will help individuals in need and HM Treasury expects around 700,000 will benefit from the scheme this year. It should be mentioned that it is not a payment holiday and the expectation is that individuals continue to pay their debts and ongoing liabilities whilst they work with a debt advisor to find a sustainable debt solution.

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