People in England and Wales who are struggling with problem debt are now entitled to a two-month grace period to get their finances back under control thanks to new ‘breathing space’ rules that have come into force.
Those affected won’t face enforcement action from their creditors and can get a 60 day respite during which all interest and charges on their debt will be frozen.
If someone is receiving mental health crisis treatment, they are entitled to a ‘recovery space’, which lasts the length of their treatment and a further 30 days.
In both cases, you need to ask for this help via debt help services such as charities and commercial debt advice companies. If you’re getting treatment for a mental health crisis, speak to a mental health professional.
The main points about how the breathing space rules work are:
- You won’t be charged additional interest or fees and those you owe the money to are not allowed to backdate any interest or fees after the breathing space ends.
- Enforcement action must stop. This means that those you owe the money to are not allowed to: Force you to pay the debt, contact you about enforcing the debt, apply to the Department for Work and Pensions for deductions to be taken from your benefit payments to recover the debt, sell or take control of your property or goods, start any action or legal proceedings against you or disconnect your gas or electricity or try to install a prepay meter to recover energy debt.
- Most debts are covered. You can only get a breathing space on certain qualifying debts, including: Credit and store cards, personal loans, payday loans, overdrafts, utility bill arrears, mortgage or rent arrears and council tax arrears. Breathing spaces don’t cover secured debts such as a mortgage or car hire purchase agreement, debts incurred through fraud and any liabilities to pay fines imposed by a court for an offence.
If you’re not already seeing a debt advisor or they are unable to help, contact a debt help charity. Options include Citizens Advice, StepChange and National Debtline.