Brits who are struggling with debts can apply for a 60-day “breathing space” period through a new scheme launching next week.
During this time, borrowers will be protected against debt collectors and bailiffs while they seek long-term money help.
Creditors will also not be able to add interest or other charges to your debt while you're being helped.
Debts that will be covered through the scheme include credit cards, personal loans, overdrafts, utility bills and mortgage and rent arrears.
To receive the help, you must agree to work with professional debt advisers to help you find a long-term solution to clear what you owe.
You must also keep up with your debt repayments where possible during your "breathing space".
Those who are receiving NHS treatment for mental health will continue to be protected even if they do not seek debt advice.
The Debt Respite Scheme will start on May 4 in England and Wales. It was first announced by the government in 2019.
You can only apply for breathing space once every 12 months.
Which debts are covered and which ones aren’t?
According to the official Gov.uk webpage for the scheme, most debts are likely to qualify for the support. These will include:
- Credit cards
- Store cards
- Personal loans
- Pay day loans
- Overdrafts
- Utility bill arrears
- Mortgage or rent arrears
Government debts like tax and benefit debts are also likely to be eligible - if you’re unsure, speak to a debt expert.
Joint debts can be included in a breathing space, even if only one person applies for the support.
But keep in mind that not all debts are covered by the scheme. This includes:
Secured debts
Debts incurred after your breathing space started
Debts from fraud
Court fines (but penalty charge notices like parking tickets apply)
Child maintenance debts or money owed under an order from family court proceedings
Debts from a confiscation order
A crisis or budgeting loan
Student loans
Advance payments of Universal Credit
Council tax debts that are not due yet
Personal injury damages
Those who have a debt relief order, individual voluntary arrangement or have filed for bankruptcy also cannot apply for the support.
Again, if you are unsure, speak to an expert to see what help is available to you.
How do I apply for breathing space?
To apply for help through the scheme, you’ll need to arrange this through a debt advisor.
There are plenty of organisations that give out free debt help - don’t be tempted to pay a debt firm for their advice.
Organisations like StepChange or the National Debtline will be able to help you for free.
If you’re eligible for the scheme, their debt advisers will submit the application on your behalf to the Insolvency Service.
