What can I do if my Debtor has entered Breathing Space?

What is Breathing Space? 

Breathing Space (Debt Respite Scheme) is a government scheme which is designed to give individuals time to obtain debt advice and look for possible solutions in respect of their outstanding debt. 

There are two forms of breathing space: – 

• Standard Breathing Space– If your debtor is in this form of breathing space, you may need to place a pause on any enforcement action and collection of the debts. Further, you will also have to freeze any interest and charges on any eligible debts in this period. Standard breathing space will last for a period of 60 days, as long as your debtor remains eligible. 
• Mental health crisis breathing space- This form of breathing space can provide extra protection for debtors who are receiving treatment in respect of their mental health. Mental Health Crisis Breathing can last for the period of the mental health crisis treatment, plus an additional 30 days. 

For your debtor to be eligible for standard breathing space, the following criteria must be met:-

• The individual must live in England or Wales;
• The individual must be unable to repay some or all of your debts ‘as they fall due’, this can include: credit card and personal loan debts;
• The individual must not be in a Debt Relief Order, Individual Voluntary Arrangement (IVA), an interim order or be an undischarged bankrupt.
• The individual must not be already in breathing space or have had breathing space in the last 12 months; and 
• An application for the breathing space scheme must be applied through a qualified debt advisor. 

For your debtor to be eligible for mental health crisis breathing space, the following criteria must be met:- 

• The individual must live in England or Wales; 
• The individual must be unable to repay some or all of your debts ‘as they fall due’, this can include: credit card and personal loan debts 
• The individual is receiving mental health crisis treatment.

Mental health crisis treatment is further defined as either:- 

• The individual is detained in hospital under the Mental Health Act (also known as being sanctioned);
• The individual has been taken to a place of safety by a police officer under the Mental Health Act. The place of safety might be their own home, a friend or family member’s home, a hospital or sometimes a police station. 
• The individual is getting crisis care from a specialist mental health team in a hospital or in the community.

Review of Breathing Space

If your debtor is in breathing space, you can request that the Debt Adviser review the same, if you feel that: :-

• Your debtor does not meet the eligibility criteria for breathing space;
• Your debtor is not eligible for breathing space due to the type of debt; 
• Your  debtor has enough money to repay the debt; and
• The granting of breathing space unfairly prejudices your interests. 

However, please do note that there are time limits in respect of when you are able to request a review. You can request a review:-:- 

• Within 20 days of the breathing space starting, this is based on the start date stated in the notification which you have received from your debtor. 
• Within 20 days of an additional debt being added to the breathing space. This is based on the date when you received or were deemed to have received the Breathing Space Notification from your debtor.

The debt adviser will carry out the review and they can cancel the breathing space if they believe there are sufficient grounds in respect of this.

What if they do not cancel my debtor’s breathing space upon review?

If upon review, the debt adviser does not cancel the breathing space, you can apply to the court to have the breathing space cancelled. 

If a creditor does decide to apply to the Court, the debt review adviser will need to be notified of this. The application should be made on the same reasons put forward in the initial review.

The creditor will need to apply to the Court within 50 days of the breathing space starting, or 50 days after being notified about an additional debt being added to it. The creditor cannot make the application before the debt adviser has completed their review and provided an outcome. 

The Court will not review the debt adviser’s previous decision, instead will take their own view in respect of the merits of the application based on the information which is provided to them. Costs incurred by both parties, in breathing space proceedings are left to the judge’s discretion. 

For more information on any of the issues raised in this article, please contact our Banking & Finance team by completing the form at the bottom of this webpage or calling Manider Singh 01869 252761.