Debt Respite Scheme (Breathing Spaces) Procedure

If the person has capacity to apply

If the person has capacity to apply for a standard breathing space they should make the application themselves, or if they have a Lasting Power of Attorney, instruct them to make the application on their behalf.

If a person with mental capacity needs help to apply but does not have a Lasting Power of Attorney, they can be supported by anyone of their choosing. For example a carer, family member, friend or advocate.

If the person lacks capacity to apply

Note: A mental capacity assessment must be completed before making a decision that the person lacks capacity to apply for a standard breathing space.

Note: After the person has been assessed as lacking capacity to apply, the best interest principle must be applied to determine whether or not to make the application. For guidance about assessing mental capacity and making a best interest decision see: The Mental Capacity Act 2005 Resource and Practice Toolkit.

If a person lacks capacity, and making the application is in their best interests, it should ideally be made by someone with the legal authority to do so, normally a Lasting Power of Attorney or a Deputy appointed by the Court of Protection.

If there is nobody with the legal authority to do so, the application can be made by any other appropriate person. Who is deemed most appropriate will be determined by the specific circumstances of the case and could be a carer, family member, health and social care professional or advocate.

If the person has capacity to apply they (or, if instructed, their Lasting Power of Attorney) should be signposted to a local Debt Advisor. Each Debt Advisor is likely to have their own process for obtaining the information they need upon which to determine whether a breathing space should be started. This could be over the telephone, via email or through a face to face meeting.

Citizens Advice

Individuals can be signposted to the Citizens Advice debt advice line, where they can be supported to find a local debt advisor:

Tel: 0800 240 4420
Online: Citizens Advice

Money Advice Service Debt Advice Locator

This is a free service that allows people to search for debt advice in their local area.

See: Where to get free debt advice

This part of the procedure only applies if the person lacks capacity and there is nobody with the legal authority to act.

Information to gather before contacting a Debt Advisor

All of the following information must be gathered:

1. The person's full name;
2. The person's date of birth;
3. The person's usual address;
4. Details of all debts they owe;
5. Contact details for all creditors (to the best of your knowledge);
6. If debts relate to a business the person owns, the trading name of their business and business address.

It is important to make sure that account numbers, reference numbers etc. are all gathered.

Nominated point of contact

As the person lacks capacity, the Debt Advisor will not be able to communicate with them directly about the application. An appropriate person should be nominated for this purpose and their name and contact details provided to the Debt Advisor along with the above information.

The nominated point of contact may or may not be the practitioner making the application, depending on the circumstances.

Submitting the information

Information should be submitted in line with the requirements of the Debt Advisor being used.

Once the information has been submitted to the Debt Advice Provider, you have no further role unless you are acting as the nominated point of contact.

The Debt Advisor is responsible for carrying out all checks to ensure that all of the following eligibility criteria for a breathing space is met:

1. The person is an individual;
2. They owe a qualifying debt to a creditor (see 'Establishing qualifying debts' below);
3. They live or usually reside in England or Wales;
4. They do not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order or be an undischarged bankrupt at the time they apply; and
5. There is not already a breathing space in place.

For a standard breathing space the Debt Advisor must also make sure that the person has not had a standard breathing space within the last 12 months.

To be eligible for a breathing space the person must have at least one qualifying debt.

Examples of qualifying debts include:

1. Credit cards;
2. Store cards;
3. Personal loans;
4. Pay day loans;
5. Overdrafts;
6. Arrears on utility bills;
7. Most government tax and benefit debts;
8. Tenancy arrears; and
9. Any other debt not listed as an 'excluded' debt.

Most debts are qualifying debts. Excluded debts are limited to:

1. Debts incurred because of fraud;
2. Fines imposed by a court;
3. Secured debt (e.g. mortgages, hire purchase agreements);
4. Obligations from a confiscation order;
5. Child maintenance;
6. Crisis loans from the social fund;
7. Student loans;
8. Damages for the death or injury of another; and
9. Advance payments of Universal Credit and council tax that has not yet fallen.

For a standard breathing space application only, when the Debt Advisor has established that the above eligibility criteria is met, they must then review the person's financial situation, offering them advice and exploring alternative options that may be available to resolve the debt issue. If an alternative option to managing the debt is available, the Debt Advisor should not start a breathing space.

For a mental health crisis breathing space there is no requirement for the Debt Advisor to carry out this review or provide this advice before starting a breathing space. They must however be satisfied from the information on the Debt Respite Scheme Form that the person cannot, or is unlikely to be able to, repay all or some of their debt when it falls due.

Applicable to mental health crisis breathing spaces only, the Debt Advisor must also be satisfied that the person is receiving mental health crisis treatment.

The Regulations specify that Section 2 of the Debt Respite Scheme Form completed by an AMHP is the only way that this can be confirmed by the Debt Advisor.

If Section 2 has not been completed by an AMHP a mental health crisis breathing space cannot be started under any circumstances.

The Debt Advisor must start a breathing space when;

1. All eligibility criteria above is met;
2. The person cannot, or is unlikely to be able to, repay all or some of their debt when it falls due.

To start a breathing space, the Debt Advisor will enter a range of information about the person and their qualifying debts onto the electronic system of the Insolvency Service. The Insolvency Service will then add them to the Breathing Space Register and notify all of the creditors.

The breathing space start date is always the day after the Debt Advisor has entered the information.

Creditors must stop all recovery and enforcement action on qualifying debts for the duration of the breathing space;

1. Creditors must not contact the person in relation to collecting one of the qualifying debts;
2. If the creditor wishes to discuss the qualifying debt owed to them or the breathing space itself, they must contact the Debt Advisor.

If the person has any excluded debt, or accrues any new debt during the breathing space period creditors can contact them about collection of those debts.

For example, if the person makes a new purchase using their credit card or takes out a new loan these debts will not be included in the breathing space.

In a standard breathing space only, certain debts are classified as 'ongoing liabilities'.

On-going liabilities are routine scheduled payments that the person will be asked to pay during the breathing space period.

Specifically they are:

1. Mortgage repayments;
2. Property rental or lease payments;
3. Insurance agreements;
4. Taxes, duties and national insurance contributions;
5. Local taxes rates for the local authority;
6. Water, sewerage, electricity, gas, heating oil or solid fuel bills.

The breathing space offers protection for any arrears owing at the time it starts but the person remains liable for any other payments that fall due during the breathing space period.

The Debt Advisor must carry out a midway review to explore any steps the person is taking, or plans to take, to manage the debt once the breathing space comes to an end and to offer advice about available options.

Steps could include:

1. Entering a debt solution, such as a debt relief order or bankruptcy; or
2. Making a formal voluntary arrangement with the creditor to deal with the debt.

There is no requirement for the Debt Advisor to carry out a review during a mental health crisis breathing space, so long as the person is continuing to receive mental health crisis treatment. The Debt Advisor will communicate regularly with the nominated point of contact to seek this assurance.

Once the mental health crisis treatment has ended the breathing space continues for a further 30 days to allow the Debt Advisor to offer advice about how the person can manage the debt once the breathing space comes to an end. If the person is likely to need more than 30 days to resolve their debt issues they can make a subsequent application for a standard breathing space.

If you become aware of a change in the person's financial circumstances that may impact on their eligibility for any type of breathing space you should let the Debt Advisor know.

In all cases, after a breathing space has ended creditors can resume or begin taking action to enforce the debt.

This includes:

1. Contacting the person directly; and
2. Resuming or beginning legal proceedings to collect the debt.

However, creditors cannot take further enforcement action if, during the breathing space period the person has already;

1. Entered a debt solution, such as a debt relief order or bankruptcy; or
2. Made a formal voluntary arrangement with them to deal with the debt.

When the breathing space ends the creditor can begin applying fees, interest, penalties and charges from this date.

They cannot apply those that have been accrued (or would have been accrued) during the breathing space period unless a court has expressly authorised this.

A person can only have 1 standard breathing space per annum. If you know that they have already had a breathing space in that time a further application should not be made. However, you should ensure that they are signposted to a Debt Advisor with whom they can review their circumstances and obtain good advice.

There are no limits to the number of mental health crisis breathing spaces a person can have.

The process of application for a further breathing space is the same as the process for the first.

Depending on the type of breathing space, the process will be set out in either section 6 or section 7 of this procedure.