The government’s ‘breathing space’ scheme could offer those in debt a valuable 60 day respite period to seek help and get their finances in order.

The breathing space scheme, also known as the debt respite scheme, was first announced by the government in October 2017.

The scheme is intended to give people time to get debt advice and organise a sustainable repayment scheme without their debts spiralling further out of control.

How will it work?

When a person enters the scheme, their existing debts will be frozen and will stop incurring interest, fees, or enforcement action for a 60 day period.

During this period, arrangements should be made to pay of the debts with a sustainable repayment plan.

Some solutions that may be offered to those receiving breathing space include:

• Insolvency
• Individual voluntary arrangement (IVA)
• Debt relief order
• Debt management plan

It’s important to note that whilst breathing space prevents existing debts from growing, it does not freeze regular incoming household bills and secured debts, these will still need to be covered as usual.

Responses to the scheme

Since 2017, there have been many responses to the scheme and consultations to finalise the details. With significant alterations including the scheme being extended from a 6 week period to a 60 day period, and confirmation that those in hospital or under the care of a crisis team will not be required to attend a meeting to be eligible to the scheme.

It has not yet been announced when the scheme will officially come into effect, but the government has stated that it should be sometime later this year.