CP Law Associates

What is the Debt Respite Scheme?

What is the Debt Respite Scheme?

On the 4th May 2021, the Debt Respite Scheme came into effect. The Regulations contain many details and below we have summarized the main headline points of the scheme.

The Debt Respite Scheme, which is also known as ‘breathing space’ provides a tenant in debt protection from creditors including landlords or letting agents as it pauses the creditors’ ability to pursue the debtor for the debris for the defined period as well as being able to pause interest and late payment fees. 

Who is eligible to apply for the Debt Respite Scheme?

The Debt Respite Scheme applies to individuals and sole traders, (excluding companies) who are not VAT registered. There are two types of legal protection; a standard breathing space moratorium and a mental health crisis breathing space moratorium. 

Obtaining a Standard breathing space moratorium

To be eligible to obtain a standard breathing space moratorium, a tenant has to apply to an FCA registered debt adviser. If the application is approved and successful, the breathing space moratorium will then be able to protect both the tenant and the creditor action for up to 60 days after this. Once this type of legal protection has started there is then an application reviewing process which is taken on by a debt adviser between the days of 26 to 35, at this point the debt adviser can then make a judgement on whether at this point the moratorium will either be cancelled or continue to be in place for the full 60 days. 

Mental health crisis breathing space moratorium 

Another type of legal protection that could be in place is known as a mental health crisis breathing space moratorium. To qualify for this type of legal protection, the individual/sole trader must also meet the same requirements as a standard breathing space moratorium but they must also be able to prove that they are receiving mental health crisis treatment at the time of making their application. For this type of legal protection the breathing space will continue throughout the whole of the tenants treatment period and will continue for another 30 days or, it can also continue for 30 days after the date a debt advisor had no response after requesting more information on the mental health crisis treatment that the individual is having. 

Do you need more information on the changes that have come into play since the 4th May 2021? Our debt lawyers are on hand to answer any questions that you my have on the Debt Respite Scheme. Contact our debt team today. 


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