Breathing space is a period of time during which an individual in problem debt is provided with respite from creditor action in order to fully engage with debt advice and seek a sustainable solution to their debts. The government has two policy objectives for the introduction of breathing space. The first objective is to provide sufficient protections for individuals to help them to enter into a sustainable debt solution. The government intends for breathing space to further protect individuals from recovery and enforcement action whilst working with a debt advice agency. This temporary period of protection, allowing full engagement with professional debt advice, will better enable them to identify and access a positive and sustainable solution to their debts. The second objective is to encourage more individuals to seek debt advice. Research for MAS shows that there are significant benefits to debtors and creditors when individuals with problem debt access debt advice:
people accessing debt advice are less likely to sink into a cycle of debt
creditors receive higher repayments and spend less on recovery costs[footnote 2]
MAS’ research also noted that there are broader social benefits – including reducing the impact of debt on people’s mental health, and increasing their productivity. However, not enough people who could benefit from debt advice seek support. The Independent Review of the Funding of Debt Advice[footnote 3], commissioned by MAS and written by Peter Wyman, recommended that around 1.7 million people a year could benefit from engaging with debt advice. Around 1.1 million people a year currently receive debt advice[footnote 4]. More generally, even when individuals seek debt advice, they often do so significantly later than when the advice would first be beneficial. Figures from the debt charity StepChange show a majority of their clients were worried about debts for a year before seeking advice. Two-thirds of the clients of Christians Against Poverty waited for over a year to seek advice[footnote 5]. A third waited over three years[footnote 6]. By offering debtors protection from creditor action and providing time and space to consider a way to manage debts, breathing space is intended to encourage those who require debt advice to seek help at an appropriate time. The next two chapters of this consultation set out the eligibility criteria for breathing space (chapter 3), and the protections that would be offered to individuals during this period (chapter 4).