Tue 16 Jul 2019

HM Treasury's Breathing Space Scheme

The UK Government's manifesto commitment to implement a Breathing Space scheme to assist vulnerable customers and those in problem debt is to be implemented in early 2021. The confirmation of this, on 19 June, came following a call for evidence in October 2017 and HM Treasury's consultation on its policy proposals which opened October 2018.

The Breathing Space scheme will give those in problem debt the right to legal protection from creditor action whilst they are receiving advice and entering an appropriate debt solution.

The scheme will apply to debtors who are individuals. The Breathing Space period, during which time they will be protected from enforcement action, will be 60 days. Debtors will need to engage with professional debt advisors during this time with the aim of them finding a long term solution to their debts and getting back on track with payments. It is envisaged that this will be done by debtors entering into a statutory debt repayment plan. 

Additional protections are envisaged for those receiving NHS treatment for mental health crisis. It will not be necessary for them to seek debt advice within 60 days and the Breathing Space protections will apply to them for the whole of their treatment.

The scheme will cover a broad range of debts, including arrears owed to central and local government. So the scheme has the potential to have a significant impact on the public sector.

The full details of the scheme will be set out in regulations which are to be put to Parliament before the end of 2019.

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