The Debt Respite Scheme – All You Need To Know

The Debt Respite Scheme, commonly known as the Breathing Space scheme, was updated on the 4th May 2021. The scheme was first announced in 2019, after a five-year campaign from debt charities wanting the government to intervene and help those facing financial difficulties. The aim of the scheme was to provide a respite period for those facing mounting and impending debts and will give someone in problem debt the right to legal protections from their creditors.

Under the legislation, there are two types of breathing space: a standard breathing space and a mental health crisis breathing space. 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).

A breathing space can only be started by:

  • a debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling
  • a local authority (where they provide debt advice to residents)

Debt advice providers are responsible for the administration of a breathing space. They are the point of contact for the debtor, their creditors (and appointed agents), and the Insolvency Service (who own and maintain the electronic service).

How To Comply With Breathing Space If You’re A Creditor

As a creditor, if you’re told that a debt owed to you is in a breathing space, you must stop all action related to that debt and apply the necessary protections. These protections must stay in place until the breathing space ends.

The UK Gov Insolvency Service electronic service will send you a notification to tell you about each debt owed to you in a breathing space and the date the breathing space started. You need to make sure you apply the protections to these debts from the date set out in the notification.

If you’re a creditor, it’s also possible your debt might be added to a breathing space at a later date, because it is only identified after the breathing space has started. In this case, you have to apply the protections from the date you get the notification, or when the regulations consider you to have received it, whichever is the earliest.

For electronic notifications this is the date they are sent. For postal notifications this is 4 working days after it was posted.

How To Comply With Breathing Space If You’re In Debt

Debtors can only access a breathing space by seeking debt advice from a debt adviser. Debts included in a breathing space must be qualifying debts, usually characterised as debts acquired through:

  • credit cards
  • store cards
  • personal loans
  • pay day loans
  • overdrafts
  • utility bill arrears
  • mortgage or rent arrears

New debts incurred during a breathing space are not qualifying debts. Neither are new arrears on a secured debt that arises during a breathing space.

To apply, a debtor must provide their debt adviser with their:

  • full name
  • date of birth
  • usual residential address (in some very limited circumstances, this address might be withheld from the breathing space register and any notification to creditors)
  • details of the debts that they owe, including the type of debt they owe
  • the name and contact details for the creditor
  • if relevant and known, the name and contact details for any agent appointed by the creditor

If the debtor is a sole trader and has business debts to include, they must also provide:

  • their trading name or names
  • any business address

Anyone who cannot or is unlikely to be able to repay their debts can apply to a debt adviser for a standard breathing space. Although all applications must be considered, the debt adviser might decide a breathing space is not appropriate for a debtor.

The eligibility to acquire a breathing space order must meet all of the following criteria. The debtor must:

  • be an individual.
  • owe a qualifying debt to a creditor.
  • live, or usually reside, in England or Wales
  • not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply.
  • not already have a breathing space or have had a standard breathing space in the last 12 months at the time they apply.

The debt adviser must also be satisfied that their client meets both of the following conditions:

  • their client cannot, or is unlikely to be able to, repay all or some of their debt
  • a breathing space is appropriate for their client

How To Comply With Breathing Space If You’re Suffering From Mental Health Issues & In Debt

In the latest update to the Debt Respite Scheme, the government introduced alternative route to access the protections for people receiving mental health crisis treatment, so that they do not have to access debt advice first. If an Approved Mental Health Professional (AMHP) certifies that a person is receiving mental health crisis treatment, the AMHP’s evidence can be used by a debt adviser to start a mental health crisis breathing space.

The debtor must still meet the same criteria and conditions for a standard breathing space, but they must also be receiving mental health crisis treatment at the time that an application is made. A debtor who has had a standard or mental health crisis breathing space in the last 12 months may be eligible for a mental health crisis breathing space. Unlike a standard breathing space, there is no limit to how many times a debtor can enter a mental health crisis breathing space.

In addition to the debtor, the following people can apply to a debt adviser on behalf of a debtor for a mental health crisis breathing space:

  • any debtor receiving mental health crisis treatment
  • the debtor’s carer
  • Approved Mental Health Professionals
  • care co-ordinators appointed for the debtor
  • mental health nurses
  • social workers
  • independent mental health advocates or mental capacity advocates appointed for the debtor
  • a debtor’s representative

What Happens Once A Breathing Space Is Set In Motion

A breathing space will start the day after the debtor’s details are put onto the breathing space register. This will then inform the relevant creditors that a breathing space has been sanctioned and for how long.

We hope this has outlined exactly the new measures for the Debt Respite Scheme and whether it applies to you and your business. If you require any more information on any debt advice, coping with financial difficulties, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.

 
Beyond Accountancy

At Nordens, we're more than just accountants - we're business experts who can help you achieve your biggest goals.

Nordens Strategic

Our specialist strategic division at Nordens boasts some of the leading entrepreneurial business minds in the country. We cater towards delivering consistent success stories, whilst helping businesses achieve above and beyond their initial goals.

Through highly-tailored guidance, coaching and advice, Nordens Strategic are able to define exactly how your business can reach new levels of success.

Regardless of how you define ‘success’ for your business, our strategic service is guaranteed to bring about real and lasting change. By partnering with some of the UK’s top business coaches, we’ll steer you along the path to a greater future.

Accounting 2 You

Every business, no matter how big or small, needs to make the right decisions, and how to best manage your accounts can put huge question marks over your business. Accounting2You is here to take that pressure off and provide you with all the answers you need.

Our bookkeeping branch offers a fully inclusive, comprehensive service that you can trust. Since 2005, our specialist bookkeepers have been successfully managing the accounting of both individuals and small businesses.

With experts in payroll analysis, credit control and financial recording, Accounting2You will lead your business efficiently, and with real purpose, towards a prosperous future.

Voted as EXCELLENT - 9.9 out of 10 based on 167 reviews

<
Chris Dyer

Director - Metro Bank

Nordens are always very easy to deal with and extremely professional and efficient. I would have no hesitation in recommending them to my clients for their accountancy needs, no matter how complex they may be.

Read more reviews on Trust Pilot

Jamie Brown

Co-Founder - Chicmi Limited

Very good to work with - the team go above and beyond to make the accounts easy and efficient. They're all super friendly and a joy to work with.

Read more reviews on Trust Pilot

Simon Rose

Director - Rose Opticians

I have been using Nordens Chartered Accountants for 5 years and very happy with the service provided. All members of the team are very knowledgeable and have a wealth of experience which has proved very beneficial to my organisation

Read more reviews on Trust Pilot

Rebecca Bossick

Founder & Director - Physio LDN

Very easy to contact and put me in touch with the right person whenever I need to ask any questions. Extremely knowledgeable and can help me manage my various businesses whenever I need.

Read more reviews on Trust Pilot

James Aconley

Principal - Pauline Quirke Academy

Great accountants, always available to offer advice. The team have transformed my business.

Read more reviews on Trust Pilot

Christopher Wilce

Founder - Dataphone

Having worked with Nordens over the last 5 years, not only to look after my annual accounts but they have also provided outstanding professional advice. They have guided me through a Company share buyback with clear and objective advice. We have also been using Nordens strategic services for a couple of years, which has helped bring about significant improvements that exceeded my expectations. With experience of working with several local accountants over my 29 years in business, I’m very pleased with the service I have received from Nordens.

Read more reviews on Trust Pilot

Dave Hodges

Director - Linekers

Trusted our business with Nordens for over 10 years now and watched the company grow into the successful innovative business it has become today. Deservedly so. Every aspect of financial advice we need is always given promptly and with a smile. We have total confidence in all aspects of advice Nordens give. If you are looking for accountants, its a no brainer!

Read more reviews on Trust Pilot

Tony Charles

Founder - Foundation Sports Limited

A fantastic, modern, vibrant firm that care about the clients and their staff in abundance. It is rare to find an Accountancy firm with such vibrance and focus and relationships. It is no wonder they win award after award in their field.

Read more reviews on Trust Pilot

Peter Horlock

Managing Director - Prime Time Boilers

I have been with Nordens for many years now and they are a great accountants.

Read more reviews on Trust Pilot

Simon Cushing

Founder - Vivid Finishes

We have used Nordens for the last 5 years and have had a great service throughout. The guys are very passionate about what they do and have played a part in the growth of our company, highly recommended.

Read more reviews on Trust Pilot

Andrew Martin

Managing Director - AMD Interior Architecture

Great Service at Nordens from a friendly very approachable team Particularly Kirsty Willis and Joe Sword who have been helping us since we started the business in 2016.

Read more reviews on Trust Pilot

James Robinson

Director - Forma London

Nordens provide a first class service. We moved to Nordens last year and have been impressed with the level of service provided. Keep up the good work!

Read more reviews on Trust Pilot

>
Latest News

We've always got our ears to the ground when it comes to interesting, useful and topical information relating to business and accountancy.

The Autumn 2021 Budget…
The Chancellor of the Exchequer, Rishi Sunak, will be carrying out his red briefcase and laying out his Autumn Budget plans on Wednesday 27th October 2021. The Autumn Budget doesn’t usually attract massive attention, however du...
5 Reasons Why Your…
Much has been made regarding the rise of digitalisation in most sectors in the UK, however one thing which isn’t covered extensively is the benefits of hiring a Virtual Assistant (VA). VAs are essentially a service which provid...
Nordens TV

We love making videos that break down convoluted accountancy jargon into plain-talking, actionable and accessible facts.

Live Webinar – Time…
Watch our latest LIVE webinar titled ‘Time To Revive' that was held on Wednesday 3rd February 2021 at 4pm GMT hosted by our CEO Mitch Hahn. Last year was tough for all of us. Now is the time to see what 2021 brings and how we c...
Our Christmas Message To…
Merry Christmas to all!   Here we have Mitch Hahn, CEO of Nordens Chartered Accountants delivering our Christmas message to you. Click the video link or read the full transcript below.   As we enter the ho...
  Why I Founded Nordens
Accounting 2 You

In November 2002, having sold our other business interests off earlier in the year, I decided to set up Nordens Chartered Accountants. The easy part was knowing how to do it, as I had established and built a smaller practice a few years earlier. The difficult part, for me, was not following the traditional accountancy path. Having run businesses, both successfully and unsuccessfully, I wanted to help business owners resolve their short term problems and work with them to achieve their longer term goals. Business has always been my interest and I love that I can help business owners achieve what seems like the impossible every single working day.

Mark Norden Signature

Mark Norden
Founder

We're Professionally Certified

Our limited company accountants have a range of qualifications from The Institute Of Chartered Accountants (ICAEW) to the Association of Chartered Certified Accountants (ACCA). We worry about the bye-laws, regulations and ethical guidelines of the ACCA so you don’t have to! That makes us an ACCA-accredited employer as well as a Professional Passport-accredited one!