Debt Respite Scheme - Breathing Space

[PlanB]

On May 5th the Government introduced the Breathing Space Scheme offering eligible debtors 60 days respite from interest, charges, payments, and in some cases legal action.

It has good bits and bad bits but at least it's a start.

Debt advisors were pressing for 6 months or a year's breathing space presumably because of the enormity of the debt problem caused by the pandemic.

Anyway, here's the Government's statement to creditors but I'll add more 'consumer-friendly' links to information as the scheme rolls out >

https://www.gov.uk/government/public...-for-creditors

What's most important to forum members is to be wary of applying for this if you are aiming for Statute Barred as it will acknowlege/pay towards the debt so you'll be back to square one.

More later

Di

[Timewilltell]

Interesting reading, it can only be started by a Debt Advisor ( debt charity types) or CAB? Which means that you’re not on the SB road so can’t de-rail it? If you’re in a serious debt situation is 60days going to make a big difference in the scale of things? I guess it might be a relief to those who haven’t found Sanctuary, sorry AAD already, I’d imagine most on here would sit tight and carry on with the Journey.
what I do suspect is that the alleged creditors will seek out those who do not take the 60days as prime targets for increased attention?

Buckle down, incoming Bogey!

[Joanna Connolly]

The Requirements for entry onto the Debt Respite scheme before a debt adviser can start the breathing space are:

• be an individual
• owe a qualifying debt to a creditor
• live or usually reside in England or Wales
• not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply
• not already have a breathing space or have had a standard breathing space in the last 12 months at the time they apply

As a condition is that you owe a qualifying debt to a creditor, entry onto the scheme will restart the limitation (statute barred) clock running again.

[PlanB]

I do suspect is that the alleged creditors will seek out those who do not take the 60 days as prime targets for increased attention?

Now you're just being paranoid. Although the same thought did occur to me

The parasitic business model of debt purchasers is solely based on getting money (profit) from anyone they can bully into submission by phone/text or downright scary/frightening letters threatening things which they may (and possibly know) they can't necessarily 'lawfully' achieve.

If debtors opt for this temporary respite then they'll have to pick on the others to achieve their aim.

But there is also good news with mortgage arrears being included so that as long as the borrower can pay their current monthly payment then the arrears will be effectively frozen which may help towards frustrating possession proceedings. A secured debt may not have a Statute Barred option.

My feeling (having spoken to those 'in the know') is this is an immediate holding position (60 days) which hopefully will be extended to 6 or 12 months etc. just like furlough was only for a short while initially but has now been extended to end of September 2021 (18 months).

Di

[Timewilltell]

Not paranoid for myself, I have too much support here to be paranoid, more for others that suddenly see an upturn in harassment from the parasites!!

[PlanB]

others that suddenly see an upturn in harassment from the parasites!!

I completely agree with you.

This forum helps those in debt to make choices relevant to their particular circumstances.

The Statute Barred issue is not relevant to those who are/have been making token payments to simply keep the creditor off their back (usually the original creditor not a debt purchaser).

Recently I’ve seen members who’ve been happily (both ways) making a token payment for years (some of them for 10 years) who are suddenly being threatened with legal proceedings.

Maybe the debt owner has been waiting for the debtor to get back on their feet before chasing them. If they spot a mortgage on a CRA file they’ll put 2 and 2 together to see an opportunity to get a CCJ followed by a Charging Order to secure the unsecured debt on the property.

The way I see it this is always about tactics and timing.

Di

[Timewilltell]

Yes indeed, hence why I’ve stalled the mortgage idea for the moment. Mind if my current plan comes together I might be in a position in a year to buy the house outright without a mortgage and most debts will be SB by then, not that that will stop the leaches but at least I’ll have a good argument against each thus far!

[PlanB]

On May 5th the Government introduced the Breathing Space Scheme

More later

Here's some more information from the CAB which includes details of the Mental Health Crisis (Breathing Space) Scheme which is not limited to just 60 days. It will last for as long as the person's crisis lasts plus 30 days.

I see this as a positive since debt and mental health often go hand in hand, and there'll be an explosion of debt because of the Covid-19.

It's also good to see that rent arrears and fuel bills can be included in both schemes.

CAB > https://www.citizensadvice.org.uk/ab...-need-to-know/

Di

[Gerry Jemitus]

You do have to be currently receiving crisis treatment to be eligible for this. It is not something that your GP can confirm.

As Lorraine Charlton, Debt Expert at Citizens Advice, said:

“We know that struggles with debt and with mental health often go hand in hand. If you’re in the midst of a crisis, the special provisions in Breathing Space should give you the time and space you need until you are ready to address your problem debt.

“Really importantly, these provisions only apply if you’re currently receiving crisis treatment when you make the application. So, even if you are struggling with your mental health, you won’t be eligible unless an approved professional confirms that you’re getting crisis treatment.”

[PlanB]

Another good thing about both schemes is that once the creditor has been served with a Notice they have to abide by the rules which prohibit enforcement action such as sending a Letter of Claim, getting a Default Judgment or using DCAs to write to the debtor.

This legal blog spells out the rules of the The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the “Regulations”) >

The Regulations prohibit a creditor from taking any action on a qualifying debt for the breathing space period. This means a creditor cannot:

• Require a debtor to pay interest accruing during the breathing space;
• Require a debtor to pay fees, penalties or charges on the debt accruing during the breathing space;
• Take any enforcement action in respect of a qualifying debt; or
• Instruct a third-party agent to take any of the above actions.

Enforcement is described in the Regulations as steps taken to collect a qualifying debt from a debtor, which includes sending letters before action or attempting to enforce a court judgment. It will also include taking any steps in court proceedings that are afoot, such as requesting default judgment.


Blog > https://www.moorebarlow.com/creditor...eathing-space/


The schemes aren't being seen as a quick/temporary fix, and my inner cynic tells me they'll be used to 'encourage' more debtors to sign up to StepChange etc; but including rent arrears and mortgage arrears has got to be a good thing if it helps to prevent repossessions.

There are around 1.7 million people officially unemployed in the UK so debt is a big issue.

Di

[Joanna Connolly]

[QUOTE=PlanB;n1540809

The schemes aren't being seen as a quick/temporary fix, and my inner cynic tells me they'll be used to 'encourage' more debtors to sign up to StepChange etc; but including rent arrears and mortgage arrears has got to be a good thing if it helps to prevent repossessions.



Di

[/QUOTE]

It is worth reinforcing that although existing arrears (including mortgage arrears) will be included, ongoing commitments, such as mortgages, will not be classed as a qualifying debt and the debtor should continue to pay those commitments during the breathing space. Any arrears already accrued will be a qualifying debt.

Bizarre really because if you need the breathing space you still have to pay the ongoing monthly commitments to qualify - including mortgage payments which are usually fairly substantial.

[PlanB]

Perhaps some of the people applying for the scheme may already be in receipt of Mortgage Interest Support (SMI) if they're claiming the relevant benefits such as Universal Credit or Pension Credit etc. (although the 9 month wait for SMI has always been a problem) > https://www.gov.uk/support-for-mortgage-interest

This could mean that their ongoing monthly mortgage interest payment might be paid direct to the mortgage provider by the DWP.

And some lenders will offer to let the borrower change to an 'interest only' from a 'repayment' mortgage to reduce monthly payments in order to weather the storm in the short term. This isn't as good as the 6 months of Mortgage Holiday which was offered at the beginning of the pandemic, and it may effect your credit file (unlike the Mortgage Holiday) but it may help to keep the roof over someones head.

I think the idea of the scheme is to give people in debt the peace and quiet to organise themselves financially without the relentless pressure and bullying from creditors. The 60 days without phone calls, texts and being scared to open the post or answer the door to Resolvecall will bring enormous relief to some.

Although Financial Education is on the curriculum in some secondary schools a recent survey said that 4 out of 10 children had not been taught how to budget/manage money etc.

Avoiding getting into debt would be better than having to pick up the pieces when it's almost too late > https://www.fincap.org.uk/en/articles/schools

I did start by saying that there were some good bits and some bad bits about the scheme, but even if it rescues just one family from eviction/homelessness it will have been worth it.

Di