Our government estimates that there are around 9 million people in the UK burdened by debt, of which only around 1.1 million receive debt advice each year.
Lack of knowledge, stress and anxiety can all contribute to people’s attitudes towards their debts, which can lead to them not seeking the right advice and further stress when creditors take enforcement action.
In 2020, the Breathing Space Debt Respite Scheme regulations were introduced across England and Wales to help those struggling with debt to have certain protection from debt collection activities, including a standard 60 day pause on activities, which can be extended indefinitely for those experiencing a mental health crisis.
How the scheme works
Those experiencing debt problems can contact an approved debt advisor, such as Citizens Advice Bureau or the Step Change Charity to assess whether their circumstances can be supported by the scheme. Via the Insolvency Services’ Money Advisor Portal, the debt advisor records the individual’s debts and notifies the relevant creditors, which can include money owed for council services, such as rent arrears, parking fees or overdue Council Tax.
Services across Birmingham City Council can access the Insolvency Services’ Creditor Portal to identify any Breathing Space referrals for those in debt to the council. A Breathing Space indicator or ‘flag’ can then be applied to the relevant internal system records, to suspend debt collection activity for eligible cases, for the appropriate period. The council ensures that action undertaken on its behalf by Debt Collection Agencies or courts is also paused, as well as using the Creditor Portal to notify the money advisor of any referral challenges or rejections based on the eligibility of cases.
How the scheme functionality was introduced at Birmingham City Council
Following an Agile Delivery approach has supported the successful implementation of the Breathing Space functionality across the council and helped enable the project team to overcome two major challenges. Firstly, the team had to identify which databases across the council held the largest amount of customer debt records and how collection processes could be paused. The second major challenge was that the Creditor Portal was not initially made available by Insolvency Services.
To overcome these challenges, a project team of just 3 people, firstly created a log of Breathing Space referrals from which to map to the relevant services across the council that tackle debt collection. This was important in ensuring that these services understood the impact of the Breathing Space Debt Respite Scheme regulations on their debt management processes, which debts and debtors are eligible for the scheme and how to process notifications using functionality within existing IT systems to pause and restart debt collection activities.
Now, after eight months, the scheme has enabled valuable respite for over 300 Birmingham residents with 800 council debts, many of which have been exacerbated by the ongoing pandemic. This is a great outcome that’s making a positive difference to the lives of these residents.
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