Government predict 700,000 will use Breathing Space scheme

Government predict 700,000 will use Breathing Space scheme

9:21 AM, 5th May 2021, About a month ago 12

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People in England and Wales struggling to pay debts or rent could be eligible to use the Breathing Space scheme, and Government expects around 700,000 people to benefit in the first year of the scheme.

Creditors (landlords) are not allowed to contact tenants directly to request payment of the debt or take enforcement action to recover the debt (including by taking possession of a property) for a maximum of 60 days. For a mental health crisis breathing space, the Breathing Space only ends 30 days after the tenant’s treatment ends.

John Glen, Economic Secretary to the Treasury, said: “We’re determined to tackle problem debt, but it is incredibly hard to get your finances back on track when your debts are piling up and you’ve got creditors at the door.

“This scheme will give people a breathing space from charges, distressing letters, and bailiff visits, so they can tackle their problem debt with support from a professional debt advisor.

“And to help people going through a mental health crisis, which is too often linked to financial problems, we’re bringing in stronger protections lasting beyond the end of their crisis treatment.”

Under the scheme, people will be given legal protections 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 design a plan which helps to get their finances back on track.

The standard Breathing Space can be accessed by contacting a professional debt advisor. Given this may not be possible for someone in mental health crisis treatment, an approved mental health professional can certify they are receiving treatment and then a debt advice provider can consider whether they are eligible for the scheme.

Once a tenant has entered into a breathing space you must not until it has finished:

  • Contact the tenant directly in relation to the debt
  • Obtain a warrant in relation to the debt
  • Serve a notice seeking possession because of the debt
  • Sell on the debt to a third party
  • Charge interest on the debt over the period covered by the breathing space
  • Apply for a judgement in relation to the debt
  • Enforce an existing money judgement for the debt
  • Take control of the tenant’s belongings during the breathing space
  • Request third party deductions from Universal Credit or other benefits
  • Start bankruptcy proceedings

Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “We are pleased to be supporting the launch of the Breathing Space scheme, which is a major milestone in improving the help available to people struggling with debt. Breathing Space will provide a powerful incentive for people in debt to seek free debt advice – with vital protections from interest, charges and creditor action to give people the time and space they need to begin to deal with their financial difficulty.

“Free debt advice has never been more important than in helping households to recover from the impact of Covid-19 – and Breathing Space will strengthen our ability to help people at this crucial time. We look forward to playing our role in making the scheme a success.”

Martin Lewis, founder of MoneySavingExpert.com and the Money and Mental Health Policy Institute, said: “Debt is far more than just a financial issue. It’s a major cause of relationship breakdown, can hugely diminish people’s well-being, and sadly leaves 100,000s at risk of taking their own lives. That’s why Breathing Space is so important. It’s a win-win-win; for individuals who get their finances back on track, creditors who’ll recoup more cash in the long run, and the economy as there will be less financial catastrophe.

“I’m especially thrilled that our Money and Mental Health Policy Institute suggestion for Recovery Space is coming into fruition as part of this. That means from now on, everyone receiving NHS crisis care for their mental health can recover without being hassled for escalating debt, fees and charges. Finally, people returning home after being hospitalised for their mental health, can do it safe in the knowledge there’s no threat or reality of bailiffs knocking.”



Comments

by NewYorkie

10:54 AM, 5th May 2021, About a month ago

Mental health issues do not simply disappear after a few months' counselling. Who is covering the cost of this 'Breathing Space'?
Mental health and debt are not unique to tenants. Yes, there are many tenants suffering from debt and mental health problems, but there are also many landlords suffering from debt and mental health problems.
The tenants who have been gaming the system and not paying rent, even though they can afford to, will also exploit this well-intended scheme.
How, then, does a landlord who may already be owed many £000s in rent, recover that debt, plus the accumulated debt during what could be a lengthy breathing space, in addition to the normal rent payable thereafter? What happens when a tenant who may owe £10,000 after a breathing space decides to end their tenancy 3 months later? It will prove impossible to recover that money, just as it is in most cases today.

I have a lot of time for Martin Lewis, but he appears very one-sided in this matter.

by Mike

11:59 AM, 5th May 2021, About a month ago

We also need breathing space when it comes to us paying taxes, when we can't pay them on time, or when we have not filed our returns on time, we get automatic penalty, so why don't the Government start cleaning up their act first on people unable to pay taxes on time?

by DSR

11:59 AM, 5th May 2021, About a month ago

Headline should be 'New initiative guaranteed to increase financial burden and mental stress for Landlords'

Where's our right to a 'breathing space'?

DSR

by TrevL

13:16 PM, 5th May 2021, About a month ago

Think what all the commentaters so far have forgetten is that providing property for rent in the PRS is a business/investment and therefore a money making endeavor. There is no garentee you will make money or indeed stay solvent, the whole point of the PRS is in the name, the privatisation of both profits and losses.

Yes, some tennants are going to play the game, but some also have no other opitions, no money and potentially soon (months) nowhere to live.

Few saw the pandemic coming, but what the government are saying is.......'if you can't take the risk, don't invest in the sector'. Tough luck as that may be for some.

by NewYorkie

14:39 PM, 5th May 2021, About a month ago

Reply to the comment left by TrevL at 05/05/2021 - 13:16
No, PRS is not to do with privatisation. The 'P' differentiates the private from the social rented sector, which desperately needs the private sector to expand and not contract. All landlords are used to losses under normal circumstances e.g. voids, but not when the government forces the sector to subsidise tenants and keeps moving the goalposts. Instead of gloating at landlords' plight, perhaps you should think on to the unintended consequences of a contracting private rented sector. Fewer properties to rent and higher risk to landlords = greater demand from and reduced choice for tenants = higher rents = yet more debt and mental health problems = yet fewer properties to rent...

by LaLo

19:33 PM, 5th May 2021, About a month ago

Sounds like a government trick to defer the amount of the homeless! GUY FAWKES - all is forgiven!

by David

12:22 PM, 7th May 2021, About a month ago

I struggle to see how preventing a non-paying tenant from being evicted and therefore escalating their debt can be in any way consider giving them 'breathing space' or helping their mental health.

by NewYorkie

12:33 PM, 7th May 2021, About a month ago

Reply to the comment left by David at 07/05/2021 - 12:22
Spot-on! If they haven't been paying rent for, say, 13 months, they could easily fake mental health problems for years to come, their debt will build, adding to their apparent mental health issues, to the point where they will never be able to pay it off and they are living for free. If someone else was paying my rent, I would make sure I appeared depressed whenever I went for counselling!

by Grumpy Doug

17:11 PM, 8th May 2021, About a month ago

Reply to the comment left by TrevL at 05/05/2021 - 13:16
So TrevL, if we substitute PRS with Tesco (Private Food Sector!) it's fine for folks to stock up on their weekly shop and then walk out without paying as they need some "breathing space" ... thought not.

by Mick Roberts

16:13 PM, 9th May 2021, About a month ago

We all know, it's now gonna' be even harder for the next lot of Benefit Vulnerable tenants. Having completely the opposite effect of what the Govt intended. Well, they will get temporary stay on current problems, but that problem will be hugely exacerbated next year with the homeless increasing more. Just as all their other policies.

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