Breathing Space for People with Problem Debts

The Insolvency Service is working on plans to provide legal protection from creditor enforcement for people in problem debt to enable them to seek advice and enter into an appropriate debt relief solution.

As well as a statutory ‘Breathing Space’, statutory debt repayment plans will be introduced to provide an extra way forward for people to enter into an agreement to repay their debts in an manageable way over an extended period, with legal protection (similar to the Debt Arrangement Scheme which is available in Scotland).

These two measures are intended to work independently of each other, so for example a debtor might have breathing space but after advice choose bankruptcy, a debt relief order or individual voluntary arrangement as the most suitable for them, or they might decide to apply for a statutory debt repayment plan without breathing space.

The Treasury recently consulted on a proposal for the Insolvency Service to provide a register for people using Breathing Space and, working with the debt advice sector to act as the scheme administrator for statutory debt repayment plans, as it currently does for Debt Relief Orders which are primarily accessed through debt charities.

If you would like to discuss these issues, please contact a member of our Restructuring team.