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Merlyn Holkar, Research Assistant, Money and Mental Health

Why we’re backing “breathing space”


Tomorrow MPs will debate a proposal for “breathing space” – a series of legal protections that would both stop problem debts spiralling out of control, and reduce their impact on mental health. We’re calling on the Government to accept this proposal, which would make a real difference to people overwhelmed by debt, in particular those with mental health problems.

Too often, people feel paralysed by problem debt, unsure what to do to sort it out. They may be confused about their options or nervous about accessing advice, and all the while interest and other charges keep piling up, increasing the overall debt and reducing the likelihood of a full (financial) recovery.

Whilst the debt piles up, so too do the letters. For people overwhelmed by debt, communications from their creditor, such as letters and phone calls, can be incredibly stressful. So much so that many people feel totally unable to deal with them, leaving letters unopened and the phone unanswered – creating more problems further down the line.

Breathing Space offers a practical answer to these problems that works for everyone, the creditor and the person in debt.


So what is “breathing space”?

Breathing space is a set of protections that are being proposed by Conservative MP Kelly Tolhurst, to help people get out of problem debt. Kelly Tolhurst has put forward a Private Member’s Bill, which will be debated by MPs tomorrow.

Under the proposal, people in problem debt who are accessing debt advice would be granted a 12 month window of “breathing space”. During these 12 months, interest and any other charges on the debt would be frozen, and the creditor would not be allowed to take enforcement action against the debtor, or to petition for their bankruptcy. The idea is that by removing these additional pressures, and with the support of debt advice, the debtor has a better chance of tackling their underlying debt problems and plotting a course out of debt altogether. Without breathing space, accumulating charges and enforcement action can be financially devastating and have a real impact on mental health, limiting any chance of mental or financial recovery.

This breathing space would be contingent on the person in debt getting support from debt advice services, so it provides a positive incentive for people to seek advice early. This is particularly important given we know that over half of people in problem debt wait for a year or more before seeking advice – while interest and charges pile up.


How does this relate to mental health?

People with mental health problems are three times as likely to be in problem debt than those without, and in many cases this debt can be directly attributed to the mental health problem. Mental health problems can make it harder for people to manage their money, affecting cognitive abilities such as memory and attention span, and can often lead to higher spending, whether that’s comfort spending when feeling low or uncontrolled spending sprees during the manic phase of bipolar disorder. So debt is a particular problem for people with mental health problems, and breathing space could help prevent it spiraling out of control.


Breathing space: a possibility, or a pipe dream?

One reason to be optimistic is that breathing space can be good for the creditor too. It improves the chances that the debtor will pay off what they owe, reducing the need for costly enforcement action and the risk of the debt being unrecoverable. Indeed, many creditors already offer some degree of breathing space on a voluntary basis; the problem is that current provision is inconsistent, which can be confusing for consumers and ultimately leaves gaps.

Another reason for optimism is that breathing space is a tried and tested concept. As well as being voluntarily offered by many creditors, a form of breathing space is offered on a statutory basis in Scotland, through the Scottish Debt Arrangement Scheme (DAS). In the 2015-16 financial year, £37.8 million was repaid through DAS and 1,297 people became debt free through the programme. This success in Scotland has driven the calls for breathing space to be rolled out in England and Wales. Breathing space is now championed by a wide range of charities as well as debt and personal finance experts, such as the Financial Inclusion Centre, Children’s Society, StepChange, Martin Lewis and the Money Advice service.

The only thing missing is the political will – and that’s why we’re calling on MPs to back breathing space tomorrow.


You can help by supporting the campaign run by our friends at StepChange here