A new ‘breathing space’ scheme to give people in debt time to get proper professional advice and reduce the stress caused by impending legal action is set to go live next year following a consultation.
The Debt Respite Scheme regulations – which cover most debt including rent arrears – aim to give them a better chance to stabilise their finances during a 60-day moratorium on interest, charges and enforcement action while they seek help. It will take effect from 4th May 2021.
They could then enter a statutory agreement to repay their debts to a manageable timetable and would get legal protection from creditor action during this time.
The National Residential Landlords Association says while landlords would be restricted from using the rent arrears grounds under section 8, a tenant would still have to pay their ongoing rent.
Deputy director of campaigns Meera Chindooroy tells LandlordZONE: “The aim of the scheme is to provide the tenant with the space to agree a payment plan – landlords have a measure of confidence that the tenants who enter into it will engage with the process.”
Citizens Advice agrees that it’s an enlightened approach to debt management and will no doubt help many people struggling to make ends meet. But it adds that many tenants will need help with their finances long before the scheme is up and running next Spring.
The Government says that those who need debt advice often don’t seek it, and those who do get advice often don’t get the best experience because they leave it too late when their situation is at crisis point.
Debtors receiving mental health crisis treatment will also be able to enter a mental health crisis moratorium without engaging with this debt advice.
Protection will apply for the duration of their treatment and then for a further 30 days. If eligible, debtors can then access the 60-day moratorium.
Debt charity StepChange welcomes the move which it says demonstrates an increasingly enlightened approach to the treatment of people experiencing debt problems. Head of policy Peter Tutton says:
“We look forward to working on the detail of implementation constructively with the Government, to ensure that it fully meets the policy objectives of getting more people to the debt advice that they need, and then giving them a period of calm in which to begin the process of reaching a suitable solution to their problems without fear, harassment, intimidation or escalating cost.”