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The government is establishing breathing space to help those individuals in problem debt. Today, the government is updating the House in order to reaffirm our commitment to implementing this in 2021, as planned, and to provide figures from the impact assessment which is also published today.
Breathing space will provide a period of up to 60 days, where people in problem debt would be protected from enforcement action by their creditors and the accrual of further interest and fees on their debts.
This protection will help those in problem debt move towards a sustainable debt solution. The protections from enforcement action, fees and charges will encourage more people to seek out debt advice and to seek it earlier. It will provide them with the time and space to work with their debt adviser in an environment free from creditor pressure, in the knowledge their debt won’t escalate due to further interest or charges. This will help give people the time and space they need to choose the right debt solution for them.
To ensure that breathing space works for everyone, people receiving treatment for mental health crisis will be able to enter breathing space without seeking advice from a debt adviser. They will be able to remain in breathing space for the period of their crisis treatment and a further 30 days.
In its impact assessment, the government forecasts;
700,000 people to be helped by breathing space in the first year, rising in time to over a million a year.
25,000 – 50,000 a year are expected to receive a breathing space via a specific route designed to support those in mental health crisis treatment.
The government’s impact assessment can be found here:https://www.gov.uk/government/publications/breathing-space-impact-assessment