The government has just announced Breathing Space, a new debt respite scheme that could help thousands of people.
Living with debt is something that, despite being a reality for so many people, we never really want to talk about. But at end of last year, a report by debt charity Step Change said we were walking into a “debt crisis” because of the pandemic. The research showed that 1.2 million people in the UK faced serious financial issues in 2020, including falling behind on essential bills and using more credit to make debt repayments.
Clearly, it’s time to start talking.
Staying silent on debt means that people are denying themselves the help that is there to ask for. It also keeps the conversation shrouded in a cloak of shame. And all that, in turn, means that debt can damage your mental health as well as your finances.
That’s why the government has just launched a new scheme, Breathing Space, which it claims will benefit around 700,000 people struggling with problem debt.
The scheme will give those facing financial difficulties 60 days of “breathing space” to get their finances back on track, without debts piling up, worrying letters or enforcement action. People will also have access to professional debt advice, with stronger protections for people in mental health crisis treatment.
Martin Lewis, the founder of Money Saving Expert who also campaigned for Breathing Space, talks about the scheme on the latest episode of his Ask Martin Lewis Podcast.
What is the Breathing Space scheme?
Lewis explains that people looking to benefit from the scheme should speak to a non-profit debt organisation such as Step Change, Citizen’s Advice, Christians Against Poverty and National Debtline: “If you go to one of them to sort out your debts, they can arrange automatically without an agreement from the people you owe money, to give you Breathing Space. This is for England and Wales – Scotland has something similar, Northern Ireland are looking into it.
“During Breathing Space, you will not be charged any additional interest or fees of any kind. Those you owe the money to are not allowed to backdate the interest or fees when the Breathing Space ends. Crucially, during Breathing Space […], all enforcement action must stop, so if you owe people money, they can’t force you to pay it and they can’t contact you about about enforcing the debt. They can’t apply to the DWP to deduct it from your benefit, send bailiffs or disconnect the gas and electricity…
“It’s none of that, it’s breathing space, you get these 60 days to sort your stuff out.”
He warns: “You can only have one Breathing Space every 12 months. It’s important to know that I’m not saying you don’t have to make payments – you should still, where possible, be trying to make payments for ongoing liabilities. It’s the additional charges and interest that stops, [along with] anyone trying to force you to make them. If you don’t [make payments] you’ll still owe that money afterwards.”
Can people receiving mental health crisis care get debt help?
Lewis discusses why this is so important for people’s mental health: “When people are in a panic over their debts and everything is on top of them, actually getting a little bit of time to go [Lewis takes in and releases deep breathe], ‘I’m going to sort this out’ and getting professional help from these non-profit debt agencies… it just can help things.”
He also points out: “And element of this is [called] Recovery Space. What that means is that within the Breathing Space regulations, everyone receiving NHS crisis care for their mental health automatically gets Breathing Space… for as long as their in crisis care and for a period afterwards.
“The reason we pushed so hard for this (if affects around 12,000 people a year) is because of the terrible, nightmarish stories of people being hospitalised for conditions that include anxiety… and they come back with anxiety or depression from hospital in crisis care to face bailiffs at the door the next day, which is obviously devastating for anybody, nevermind if you’re [dealing with] a crisis mental health condition.”
When can I use Breathing Space for my debt crisis?
Lewis says the scheme is available to use now: “If you’ve got crisis debts and you need help, this is now a great time to get help because you’ll get that Breathing Space and you’ll also from the non-profit debt agencies get some really good advice on how to proceed afterwards.”
You can listen to Lewis’ full advice on the latest episode of Ask Martin Lewis Podcast.
Speak to a Financial Conduct Authority registered financial adviser before taking financial advice, and think carefully before making any decision.
Images: Getty, BBC