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Treasury reveals final Breathing Space plans

The Breathing Space scheme will protect individuals in problem debt, while those experiencing mental health issues will receive further protections as they undergo treatment.

The plans will see the introduction of a 60-day Breathing Space period from 2021, during which people with problem debts will be protected from enforcement action from creditors and see their interest frozen.

 

During the Breathing Space period, individuals must engage with professional debt advisers, so they can find a long-term solution to their debts and get back on track with payments.

 

As part of these plans, and to acknowledge the links between problem debt and mental health issues, the government also confirmed that individuals receiving NHS treatment for mental health crisis will not need to seek debt advice during the 60-day period.

 

It is hoped this will remove a key barrier to access for that group of people. They will continue to receive the same Breathing Space protections, which will last for the entirety of their treatment.

 

The scheme will cover a broad range of debts including arrears owed to central and local government. This will mean council tax arrears, personal tax debts and benefit overpayments will be included.

 

As well as Breathing Space and the support for those in mental health crisis, the package also includes a Statutory Debt Repayment Plan for those with problem debt, which offers similar protection to the Breathing Space scheme, helping individuals to repay their debts over a manageable timeframe. The plan will adjust as people’s life circumstances change, which could mean decreasing monthly payments if their disposable income has changed.

 

City minister, John Glen, said: “Problem debt can have a devastating impact of people’s lives, putting a huge burden on individuals which can lead to family breakdown, stress and mental health issues.

 

“No-one should be stuck in an endless cycle of debt and facing the ever-looming threat of invasive debt collectors.

 

“That’s why I’m introducing this new scheme, giving everyone access to the advice, time and support they need to both get their finances under control and get away from the perpetual stress and worry debt can cause.”

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