Tuesday 27th Apr 2021
From the 4th May 2021, a new Government Regulation is launching which will give certain individuals, temporary protection from enforcement action by their creditors – for debts they owe.
It’s called the Debt Respite Scheme and will commonly be referred to as Breathing Space.
How could this impact my business?
For business to business transactions, only a non-VAT registered sole trader will be eligible to make an application under the Scheme and only a debt advice provider authorised by the FCA (or a local authority where they provide debt advice to residents) will be able to approve a Breathing Space order. All business with partnerships or Limited companies is excluded.
Are there different types of Breathing Space?
There are two variants of Breathing Space that can be granted.
- A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
- A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person's mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
What action must I take if I receive notification of a Breathing Space arrangement?
In all cases, the debt advisor should contact Hitachi Capital and we will liaise with them and you to confirm next actions. If you are contacted directly, please advise your Relationship Manager or Client Manager as soon as possible and they will discuss next steps.
Nothing in the regulations changes what a customer is contracted to pay.
Any request for payment along with any interest or charges will be suspended during the Breathing Space period. Usual collection activity can continue as soon as the Breathing Space has expired.
Full details of the scheme, including the terms can be found Here