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Breathing space to help those in debt

Breathing space to help those in debt

HM Treasury together with the Insolvency Service have confirmed that the new Breathing Space scheme to help those with problem debts launched on 4 May 2021. The scheme will provide legal protections from creditor action while those affected receive professional debt advice in order to find an appropriate solution to their debts.

The breathing space scheme will have a 60-day respite period during which individuals will be protected from almost all enforcement action by creditors whilst working with a debt advice agency. The scheme will apply to almost all personal debts including personal and payday loans, overdrafts, utility bills, rent and mortgages arrears, credit and store cards as well as a wide range of debts owed to government. The use of the scheme will help prevent debts from continuing to spiral by stopping the accrual of contractual interest, default interest, fees and charges during the breathing space period.

The same measures will apply to certain vulnerable individuals in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days. The government has estimated that up to 700,000 people in England and Wales will use the scheme during its first year in operation.

Creditors will also benefit from the introduction of the scheme with over £400 million in extra repayments expected in the first year, as individuals get the support they need to get their payments back on track.

If you have any queries get in touch with your usual FC contact. Alternatively, email

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