This applies to England & Wales
What is the debt respite scheme (breathing space), who can apply for this and when does it become enforceable?
Debt respite is a scheme that will be available to any person having debt problems from 4 May 2021. It merely freezes the debt for a period of time whilst the debtor arranges either independently or through a debt advisor an affordable payment plan with the creditors. Debt problems that will be considered are store cards, credit cards, personal or payday loans, overdrafts, utility bill arrears or mortgage or rent arrears.
The debtor will need to contact the local authority or debt advice provider who is authorised by the Financial Conduct Authority (FCA). The advisor may be able to assist them to get legal protection from their creditors. A debt advisor must be satisfied that the debtor meets the requirements which are that they are unlikely or unable to repay part or all of the debt and that the breathing space option is appropriate for their needs.
If a debt respite is approved it will be for missed payments or arrears up to the approval date and not for any payments that may be due in the future. What this means for a landlord is future rent will be due in full as well as what is agreed in a payment plan.
There are two types of “breathing space” A standard or metal health breathing space.
A standard breathing space is where the debtor will legally be protected from creditors and their actions for up to 60 days. Any enforcement action or contact from the creditors will be frozen, as will any interest or charges on the debt.
Mental health breathing space is for people receiving mental health treatment. If they qualify for this breathing space the protection will be in place as long as the person is receiving mental health treatment, plus 30 days.
If your tenant has applied for breathing space, you will be informed by the debt adviser. Confirming which type of breathing space and the time period that has been set. You should not contact your tenant to discuss the arrears or a payment plan, serve a section 8 for rent arrears, apply for a money judgement or take possession of the property. The debt advisor will be in contact with the debtor (tenant) for a midway review. The debt advisor can cancel the breathing space period if they are not satisfied the debtor is using the time to arrange payment plans with the creditors or a debt management plan to consolidate their debts into an affordable monthly payment. Tenant’s are required to keep up rent payments during the breathing space and failure to do so may jeopardise their right to stay on the scheme.
Here is copy of the guidance for your perusal https://www.gov.uk/government/publications/debt-respite-scheme-breathing-space-guidance/debt-respite-scheme-breathing-space-guidance-for-creditors
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