Plans To Introduce Breathing Space For People In Problem Debt Progressing

23rd March 2019

Work is underway to introduce legal protection from creditor enforcement for people in problem debt to enable them to seek advice and enter into an appropriate debt relief solution.

The purpose behind breathing space is intended to benefit both debtors and creditors by encouraging individuals to seek debt advice earlier.

Alongside this statutory ‘Breathing Space', statutory debt repayment plans will be introduced to provide an additional debt solution enabling people to enter into an agreement to repay their debts in an manageable way over an extended period, with legal protection (similar to the Debt Arrangement Scheme which is available in Scotland). It is intended that the two interventions will work independently of each other - a debtor could enter a breathing space but after advice subsequently choose bankruptcy, a debt relief order or individual voluntary arrangement as most suitable for them, or apply for a statutory debt repayment plan directly without first entering a breathing space.

HM Treasury recently consulted on a proposal, whereby the Insolvency Service would provide a register for people using Breathing Space and, working with the debt advice sector to act as the scheme administrator for statutory debt repayment plans, as we currently do for Debt Relief Orders which are primarily accessed through debt charities.