The Government has introduced the Debt Respite Scheme (Breathing Space) which came into force on 4 May 2021. This allows individuals in problem debt to apply for a breathing space during which creditors are prevented from taking any action in relation to the debt until the breathing space ends. Landlords, as well as creditors, should be aware of its terms as it will apply to residential tenants with rent arrears.
There are two types of breathing space: a standard breathing space and a mental health crisis breathing space. To apply for a standard breathing space, a debtor must seek advice from a debt adviser who will consider whether a breathing space is appropriate. It will not be granted automatically, and will depend on the debtor's circumstances. The mental health crisis breathing space is available to anyone receiving mental health crisis treatment who has contacted an approved mental health professional and the application can be made on their behalf.
A breathing space is only available to individuals, who live or usually reside in England and Wales. A standard breathing space lasts for 60 days from the date it started and a mental health crisis breathing space ends either 30 days after the debtor's mental health crisis treatment ended or 30 days after the date a debt adviser has no response after asking for confirmation from the point of contact about ongoing treatment.
Creditors will be notified that a breathing space is in place. Once a notification is received, a creditor should search their records to identify the debt and immediately stop interest, fees, penalties and charges for the debt during the period of the breathing space, stop any enforcement action and not contact the debtor in any way about the debt or repayment of it.
Enforcement action includes enforcing a judgment, obtaining a warrant or writ, taking control of the debtor's goods, commencing any legal proceedings or obtaining default judgment. For landlords, it also includes serving a notice to take possession of a property let to a debtor on the grounds of rent arrears.
The scheme is designed to give individuals the time and space to obtain advice in relation to their debts and has been introduced as a result of the ongoing effect of the Covid-19 pandemic. Landlords need to be aware of its terms to ensure that they do not fall foul of its terms when dealing with tenants who have accrued significant rent arrears.
The Debt Respite Scheme (Breathing Space) will give someone in problem debt the right to legal protections from their creditors.