The Government has introduced a new debt relief scheme called Breathing Space. It came into effect on 4 May 2021. The aim of the scheme is to give those in debt some legal protection from creditors by providing a “breathing space” for them to resolve their money issues. Could the scheme help prevent a debtor’s eviction from their home?

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 establish two types of moratoria on debt. One is called the breathing space moratorium (also known as the “standard” breathing space); the second is named the mental health crisis moratorium (also known as the “mental health” breathing space). 

The Government has published guidance on their website as to how the schemes work. This  states that:

A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.

A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).

Whilst the regulations are not aimed specifically at tenants or owner-occupiers in rent or mortgage arrears, the new scheme can be used by those facing eviction action, including court proceedings for arrears. 

If someone has rent or mortgage arrears they can seek debt advice from a debt advisor. Only a debt advice provider who is authorized by the Financial Conduct Authority (FCA) to offer debt counselling or a local authority (where they provide debt advice to residents), can start a breathing space. 

If the debtor is in a mental health crisis then other people can apply to the debt advice provider for a breathing space on the debtor’s behalf. This includes the debtor’s carer, approved mental health practitioners, care coordinators, mental health nurses, social workers, independent advocates and the debtor’s representative. 

To be eligible for the breathing space scheme the debtor must:

  • Be an individual
  • Owe a “qualifying debt” to a creditor (which includes rent or mortgage arrears)
  • Live or usually live in England or Wales
  • Not have a Debt Relief Order or an Individual Voluntary Arrangement or an Interim Order, or be an undischarged bankrupt
  • Not already have a Breathing Space, or have had a standard Breathing Space in the last 12 months

The debtor must also show that they cannot or are unlikely to be able to repay all or some of their debt, and that a breathing space is appropriate for them. 

Whilst the Breathing Space is in force, a creditor, or anyone acting on their behalf, cannot take any enforcement action against the debtor. This would include a landlord or mortgage company trying to evict an occupier for rent or mortgage arrears. . 

During the Breathing Space the debtor must continue to work with the debt advisor to try to make a plan and take action to get on top of their debts. 

Only a debt advice provider who is authorized by the Financial Conduct Authority (FCA) to offer debt counselling or a local authority (where they provide debt advice to residents), can make a decision about starting a Breathing Space. 

The Insolvency Service keeps a record of those people who are in a Breathing Space and the date a Breathing Space ended or was cancelled in the previous15 months.

A recent example of how this scheme can help tenants who are facing eviction is below:

  1. Our client approached us who had more than £14,000 rent arrears. A bailiff’s eviction date had been set for the following week;
  2. We advised our client to seek advice about  a Breathing Space. Subsequently, they applied for a standard Breathing Space through a charity called Step Change
  3. The debt advisor agreed to start the Breathing Space the following day. 
  4. We contacted the local authority landlord to confirm that the Breathing Space had been granted and they agreed to cancel the warrant for eviction. This means our client now has time to work with Step Change to try to come to an arrangement with her landlord to prevent her eviction.

If you are struggling with debts, including rent or mortgage arrears, you should speak to a debt advisor to see if you are eligible to apply for a Breathing Space. 

If you are facing eviction action please contact us to see if we can assist. We havea team of solicitors with expertise in housing cases. Please contact us on 0203 440 8000 or by email at a_housingreferrals@tvedwards.com .

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