60-day breathing space scheme begins to help those in problem debt

60-day breathing space scheme begins to help those in problem debt

A new breathing space scheme has started in England and Wales to protect people in problem debt from additional interest and charges.

People receiving debt advice can apply for the break, which lasts up to 60 days, to stop them from falling into a spiral of debt.

Those receiving treatment for mental health issues can also apply, for whom the extension lasts for the length of the treatment, plus an extra 30 days on top of that.

It has been estimated by the Treasury that the scheme could help up to 700,000 people in its first year.

Under the scheme, if a debt officer agrees on the breathing space period, all extra costs will be paused and no enforcement action can be taken.

It can only be used once during a 12-month period, and the government has said that “it is not a payment holiday”.

Bills such as rent, mortgage, taxes and utility bills should still be paid.

The introduction of the scheme comes after debt charities have campaigned for years for it, after they watched people borrow more money to pay charges and interest on existing debt.

Lorraine Charlton, a debt expert at Citizens Advice, told the BBC: “If you have unmanageable debts, the new scheme could give you the time to get the advice that will help, and to start taking action.

“Breathing space isn’t a temporary fix to simply keep your creditors at arm’s length. You’ll need to work with your debt adviser to try and make a plan to deal with your debts.”

Joanna Elson, boss of the Money Advice Trust, said that the introduction of the scheme marks a “a major milestone in improving the help available to people struggling with debt”.

John Glen, Economic Secretary to the Treasury, said: “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 adviser.

“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 mental health breathing space system, someone struggling with debt problems can use it more than once a year.

To qualify, an approved mental health professional has to certify that an individual is receiving treatment, and a debt adviser must then consider whether or not they are eligible for the scheme.

Find out more about the scheme here.