The government has confirmed its intention to launch a breathing space scheme to give those in problem debt the right to legal protections from creditor action while they receive debt advice and enter an appropriate debt solution.
Launching in 2021, the protections under the scheme will cover financial services debt, household bill arrears and arrears owed to central and local government.
Key points contained in the government’s consultation outcome, to which BVRLA provided members’ views, include the following:
- To enter the scheme, an individual will first have to access FCA-regulated debt advice, or advice from another organisation that qualifies for an exemption from FCA authorisation, such as a local authority.
- The Insolvency Service should be the central administrator of breathing space with responsibility for informing creditors that an individual has entered or exited breathing space. This will happen through an Insolvency Service-run portal.
- There will be a private register of the individuals in the protections of the scheme. As a safeguard, mechanisms will be in place to prevent creditors from being able to access details of other debtors in breathing space through this register.