In May 2021, the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Moratorium) (England and Wales) Regulations 2020 (the Regulations) took effect.

The Regulations provide debtors in England and Wales with, in most cases, temporary relief from being pursued by their creditors.

Under the scheme, there are two types of breathing space:

• Standard breathing space: this is available to any debtor with debt issues, and provides them with protection from legal action by creditors for up to 60 days
• Mental health crisis breathing space: this is only available to debtors who are in receipt of mental health crisis treatment. It provides breathing space for debtors for as long as the mental health crisis treatment is continuing, plus an additional 30 days

If a debtor enters the scheme (which they can only do after seeking advice from a debt advisor and/or mental health professional), their creditors are notified by the Insolvency Service and any actions to pursue the debt should stop until after the breathing space has ended. Such action also includes notifying any agents a creditor may have instructed to enforce the debt, that they should also cease any action against the debtor.

For example, if you have instructed solicitors to issue bankruptcy proceedings or instructed a High Court Enforcement Officer to take control of and sell the debtor’s goods (to pay back the debt), they should cease any action until such time as the breathing space has ended.

The scheme was relatively well publicised, meaning that in the first year of the scheme (May 2021 to April 2022), there were a total of 63,864 breathing space registrations, with 62,852 of these being standard breathing spaces, and 1,012 being mental health breathing spaces. This worked out at an average of 5,322 registrations per month.

In the following seven months, (up to November 2022), there were a further 43,006 registrations for breathing space, at an average of 6,143 per month, representing a 15% increase on last year’s figures to date. This upward trend is expected to continue as more and more people are becoming aware of the scheme and the partial protection it cannot afford to debtors.

Whilst these breathing spaces provide a temporary respite to any action, debtors need to be aware that they do not solve the problem of their debt. In most cases, once the breathing space had expired, the creditor will be able to pursue any action it wishes to recover the sums they are owed.

Not all debts are included in the scheme and debtors are only allowed one standard breathing space every 12 months. As such, debtors should use the breathing space time wisely to seek advice as to how they may be able to afford to pay their debts going forward, to ensure that they are not back in the same position as they were prior to the breathing space.