Help and Contact
Our Customer Guide to Breathing Space Moratorium
Breathing Space Moratorium
Breathing Space Moratorium is a debt respite scheme that helps to support people in problem debt.
Problem debt is someone who cannot or who is unlikely to be able to repay all or some of their debt.
This is a new legislation that came into effect on 4th May 2021 and aims to give anyone in problem debt the opportunity to take control of their finances.
By being a part of the scheme, it will give customers legal protection from all creditors for up to 60 days whilst accessing professional debt advice and entering an appropriate debt solution.
This protection also includes pausing most enforcement actions along with communications from creditors and it will freeze most interest and charges on outstanding debts.
Mental Health Crisis Moratorium
Mental Health Crisis Moratorium (MHCM) is only available to people in problem debt and who are receiving Mental Health Crisis treatment (sectioned under the Mental Health Act).
The Mental Health Crisis Moratorium will end 30 days after the Mental Health Crisis treatment has ended which does not have a limit of 60 days.
Key differences between Breathing Space Moratorium and Mental Health Crisis Moratorium.
Below you will see the key differences between the two moratoriums:
|Key topics||Breathing Space||Mental Health Crisis Moratorium|
|Eligibility||Person must be in problem debt||Must be in problem debt and receiving mental health crisis treatment|
|Access||Via debt advisor||Via debt advisor, using evidence from Approved Mental Health Professional (AMHP)|
|Duration||60 days (review between 25-35 days)||Duration of crisis treatment plus 30 days|
|Protections||Prevents enforcement action on certain debts||As in standard Breathing Space without requirements to meet the conditions set out (e.g. paying ongoing liabilities)|
|Prevents addition of fees, charges/interest relating to the debt|
|Obligations||Must engage with debt adviser inform of any changes in circumstances||Nominated point of contact must engage with debt advisor|
|Must continue to pay priority ongoing liabilities (utility bills and council tax)|
|Must not take out additional credit >£500|
|Frequency||Not more than once a year||Unlimited|
Applying for Breathing Space Moratorium
Before a debt adviser can start the application for Breathing Space, they must confirm that you meet all the conditions below:
- You must be an individual
- You must owe a qualifying debt to a creditor (you can see qualifying debts in this guide)
- You must live or usually reside in England and Wales
- You must not have a Debt Relief Order (DRO), an Individual Voluntary Arrangement (IVA), an Interim Order, or be an undischarged bankrupt at the time you apply
- You must not have already had a Breathing Space within the last 12 months at the time you apply.
The debt adviser must be satisfied that you cannot or are unlikely to be able to repay all or some of the debt and that the scheme is appropriate for you.
You or someone with power of attorney can apply to a debt adviser for the Breathing Space Moratorium. However, you can only access a Breathing Space by seeking debt advice from a professional debt adviser.
Breathing Space can only be requested by:
- A debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling
- A local authority where they provide debt advice to residents
Once we have been notified of your Breathing Space
When we have been notified of a customer entering a Breathing Space, all correspondence and communication relating to your debt with Severn Trent will stop immediately, unless it’s requested by yourself through the debt adviser, or if you initiate contact with us to discuss arrangements to settle the debt.
The debt adviser will be your point of contact and they will communicate with us, as a creditor, on your behalf.
Although all applications will be considered, the debt adviser might decide a Breathing Space is not appropriate for you as a customer of Severn Trent. For example, if a customer could pay their debts with some budgeting help, or they already have assets that could easily be sold to clear the debt, a Breathing Space would not be the right solution.
A Breathing Space might also not be appropriate for a customer who can enter a more suitable debt solution straight away, such as a repayment plan, without needing the protections, all of our repayment plans and schemes can be found in this guide.
If you’re eligible for Breathing Space
If you’re eligible, your debt adviser will review your application for a Breathing Space Moratorium, and they will consider the following factors:
- You have funds or income available to pay debts as and when they become due
- You would benefit from entering a debt solution, either now or in the immediate future, an example for a debt solution may be a repayment plan
- You are eligible to enter a debt solution during or as soon as possible after the Breathing Space Moratorium ends
- Assess which debt solution would be most appropriate for you, and which is sustainable for your needs
Obligations & criteria
There are some obligations regarding the Breathing Space Moratorium that you must ensure you follow once you have entered:
- You must engage with the debt adviser to inform them if your circumstances change at any point within the 60 days
- You must continue to meet certain ongoing liabilities, for example you must ensure to pay your priority bills
- You must not take out any additional credit over £500
Information you must provide your Debt Adviser
The Debt Adviser will need some information from you to be able to consider your application, the information they may ask you to provide is as follows:
- Your full name, date of birth & usual residential address
(If you don’t have a fixed address your Debt Adviser will follow the usual protocols to ensure this information is accurately filled in, and they may ask you to provide a previous address where they can identify you).
- If you are applying for the scheme as part of a business, and you are a sole trader, you must include your trading name or names, and any business address
- Details of any debt that you owe, to the best of your knowledge, including the type of debt owed and the name and contact details of the creditor
- Details of any enforcement agents or other agents that have been instructor by a credit to collect or enforce debt collection on their behalf, including any contact details
Debt practitioner / adviser job role
A Debt adviser is anyone who is an approved practitioner by the Financial Conduct Authority, offering professional debt advice.
If you need assistance to help get your finances back on track, below is a list of Debt Practitioners and charities that may be able to help you:
Step Change Debt Charity
You can visit their website, or you can contact them on 0800 138 1111.
Citizens Advice Bureau
You can visit their website andyou can contact your local Citizens Advice.
You can also phone the adviceline on 0800 144 8848.
You can visit their website or you can contact them on 0808 808 4000.
You can visit their website and you can use theironline form tocontact one of their teams.
Debts included and excluded for Breathing Space
Our responsibilities as creditors
As a creditor, once we are notified that a customer has entered the Breathing Space Moratorium, we will stop all debt recovery action, including enforcement action, and we will apply a protection to the account.
The protection will stay in place until the Breathing Space period ends. We will receive a notification from the Insolvency Service to notify us when a customer enters the Breathing Space, and the date this started from.
During a standard Breathing Space, a debt adviser must carry out a midway review between day 25 and day 35. This is to make sure they are satisfied that you are complying with the moratorium obligations.
If the debt adviser thinks the customer has continued to comply with the obligations an is communicating with them, the Breathing Space moratorium will continue until the agreed end date.
If the debt adviser thinks the customer has not met all of their obligations, they can cancel the standard Breathing Space moratorium in respect of some or all of the debts.
The Mental Health Crisis Moratorium does not have a midway review, but the debt advisor will regularly check that the person is still receiving Mental Health Crisis treatment.
If you pay us through benefits
If you pay us through Water Direct, where we take deductions straight from your benefits, we will notify the Department for Work and Pensions (DWP) that you’ve entered Breathing Space, and they will amend your deductions so you’ll only be paying your ongoing charges with no arrears during Breathing Space.
Reporting payment behaviour to credit reference agencies
If you are accepted onto Breathing Space, all debt recovery activities including additional charges/interest, costs and fees, court action or third party debt collection will be suspended on your account, and you will not be contacted regarding any qualifying debts unless you request this through your debt adviser.
We also won’t issue any default notices on your credit file during this period. We will continue to report your payment behaviour as normal on your credit file every month where we receive no payments.
We have more information on how we share data with Credit Reference Agencies.
Once Breathing Space or Mental Health Crisis Breathing Space ends
Once your Breathing Space moratorium ends, we will contact you either by letter or by email to let you know. We will provide you with information on all of our help when you need it schemes.
When a Breathing Space ends, our debt recovery process will resume as normal from the point the account was paused, unless you’ve gone into a debt solution for example a Debt Relief Order or Bankruptcy, or if you’ve made a formal agreement with us to deal with the debt, such as a payment arrangement.
A Mental Health Crisis Breathing Space will end either 30 days after your Mental Health Crisis treatment ended, or 30 days after the date a debt adviser receives no response when asking for confirmation from the nominated point of contact about your ongoing Mental Health Crisis treatment.
Help with paying your bill
We know that sometimes it’s difficult to pay your bills. If you ever need a helping hand, our financial support schemes can offer you the help you might need.
We have several schemes that can help you if you’re struggling to pay your bill, whatever your circumstances.
From setting up regular, manageable payments, to reducing your bill to an amount you can afford if you’re on a low income, we’re here to help.
Get in touch with us if you have any questions
If you have further questions about the above guide, please contact us using web messenger, social media and someone will be able to support you with your query.