Housing Rights responds to Treasury's Breathing Space consultation

Housing Rights has responded to the Treasury’s Breathing Space Scheme policy proposals.

Housing Rights previously responded to a call for evidence in 2017. In October 2018, the Treasury published detailed policy proposals regarding the operation of a Breathing Space Scheme and associated Statutory Debt Repayment Plan (SDRP).

The Breathing Space Scheme is intended to give people in problem debt the right to legal protections from creditor action while they receive debt advice and enter into an appropriate debt solution.

The proposed SDRP would enable someone in problem debt to enter a statutory agreement to repay their debts within a manageable timetable. Individuals entering an SDRP would receive legal protections from creditor action for the duration of their plan.

The main objectives of these schemes are to encourage more individuals to seek debt advice and to provide protections to people in debt to facilitate them entering into a sustainable debt solution.

Of particular note are the following proposals:

• The proposed breathing space period has been extended from 6 weeks to 60 days;
• The proposed duration of the SDRP will be a maximum period of ten years;
• It is proposed that debtors will have legal protection from creditors having entered a breathing space or SDRP, with no contact from creditors except for ‘business as usual’ communications (such as statements and marketing). Most enforcement action would be paused and no new legal action could be initiated; and
• It is proposed that interest and charges would be prevented from accruing during a breathing space or SDRP (and also from being retrospectively applied once a breathing space or SDRP comes to an end).

With regard to the housing-specific aspects of this consultation, the following measures are proposed:

• Housing debts could be excludable under the SDRP, thereby enabling clients to repay these debts more quickly to avoid eviction; and
• Where housing debts are included in any SDRP, these debts would be prioritised.

Housing Rights’ views on these proposals are outlined in our response to the Treasury.