Credit, Collections & Insolvency News
The government has confirmed that the new statutory Breathing Space scheme will launch in May next year. The government has published draft regulations titled The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020.
The news will mean that people in problem debt will be able to access 60 days of protection from interest, charges and creditor action while they seek debt advice. Debt charities have long campaigned for the scheme, which will cover almost all creditors and will be followed by the establishment of statutory debt repayment plans at a later date.
During this period, individuals will receive professional debt advice to find a long-term solution to their financial difficulties. Those people receiving mental health crisis treatment will receive the same protections until their treatment is complete.
The government has confirmed that the new scheme will go live on 4th May 2021.
The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has welcomed the government’s confirmation that the new statutory Breathing Space scheme will go live next year.
Joanna Elson OBE, Chief Executive of the Money Advice Trust, said “Breathing Space will provide the time and protections that people in financial difficulty need to begin to deal with their debts, and gives us a powerful tool to incentivise people to seek free debt advice. We welcome the government’s commitment to launch the scheme on 4th May 2021, and look forward to continuing to work with the Insolvency Service on its implementation.”
“As households deal with the economic and financial impact of the Covid-19 crisis, the benefits that Breathing Space will bring cannot come soon enough. We now need similar clarity on the timetable for the introduction of statutory debt repayment plans – as well as urgent action to reform government debt collection practices – to keep up the welcome progress on this agenda.”
StepChange Head of Policy Peter Tutton said “We look forward to working on the detail of implementation constructively with the Government, to ensure that it fully meets the policy objectives of getting more people to the debt advice that they need, and then giving them a period of calm in which to begin the process of reaching a suitable solution to their problems without fear, harassment, intimidation or escalating cost.”
“There is still more that Government can do to help support the increasingly enlightened approach to debt that the Breathing Space scheme augurs – in particular, by ensuring that Government’s own debt management practices are improved so that they don’t lag behind those in the regulated consumer sector. We are hugely encouraged that this is the direction of travel in which public policy is heading, especially as the pandemic has laid bare the extreme fragility of the nation’s household finances.”