Breathing Space scheme to help families in debt

A number of debt charities are calling on the Government to give all individual debtors a “breathing space” in which interest, charges and enforcement action are stopped for those seeking regulated debt advice. They argue that where people in financial difficulty “do the right thing” and engage with their creditors, make affordable offers of payment and maintain regular payments, they should be protected from further debt enforcement.

The current Scottish Debt Arrangement Scheme , which does provide debtors with a short breathing space, is often held out as an example of the type of scheme that might be introduced in England and Wales.

This is a brief outline of the Scottish Debt Arrangement Scheme (DAS):

In brief, Debt Payment Programmes (DPPs) approved under the Scottish Debt Arrangement Scheme (DAS) allow individuals, couples or sole traders to repay their debts in full over an extended period of time. This provides protection from enforcement by their creditors and the safeguarding of their home as long as mortgage payments are maintained.

An ‘approved’ money adviser has to make the application for the client. If the application is successful and payments are maintained, all interest and charges will be stopped from the date of the application and written off once the programme is completed. Creditors will not be able to use diligence (enforcement action) to enforce payment of the debts.

Importantly, the approved adviser can apply for an 'intimation' of an intention to apply for a DPP which is placed on the DAS register. This gives a breathing space of protection against any creditor action for 6 weeks whilst the full application is prepared.

Further information

Breathing space for individuals in debt, Commons Library Briefing paper CBP-7934, 22 March 2017

The Children's Society: Breathing space: the impact of money worries on children's mental health