SPACE TO BREATHE
ADAPTING SYSTEMS FOR BREATHING SPACE

Aryza Lending Solutions

Coming into force on the 4th of May 2021, The Debt Respite Scheme, otherwise known as breathing space, will impact how consumer credit lenders and debt collection agencies interact with individuals struggling to manage their debt.

Here, Paul O’Sullivan, Aryza Lending Division CEO, explores what this means for lenders and how new technologies can help minimise disruption and provide greater support for consumers.

Breathing space will be available to anyone with problem debt, giving them legal protections from creditor action for up to 60 days. These protections include pausing most enforcement action and contact from creditors, as well as freezing most interest and charges on their debts.

DATABASE CHANGES
Ensuring your software has the capability to adequately manage breathing space cases is vital, as a lender you will need to be able to track information around the type of debt agreement, transaction types, fees and charges, details of the debt adviser and consumer, while also applying configurable rules on managing the process on a case-by-case basis.

BREATHING SPACE RECORD
As a lender, if you’re told that a debt owed to you is in a breathing space, you must stop all action related to that debt and apply the protections. These protections must stay in place until the breathing space ends.

Look for software with the functionality to ensure you are always working off the most accurate and relevant information. The ability to create a breathing space record, listing the full details of the case, its start and end date, and the debt advisor acting on behalf of the customer will help you offer a more personalised service.

The functionality to search for cases will also streamline the administrative burden, allowing you to easily identify other applicable debts linked to that customer and helping guide them towards a healthier financial future.

AGREEMENT FEES AND INTEREST PROCESSING
Debts included in a breathing space must be qualifying debts, such as credit or store cards, personal or payday loans, overdrafts, utility bills, mortgage or rent arrears.

Whilst in a breathing space agreement, it’s important to remember that the debtor does not have to pay certain interest, fees, penalties or charges. Specialist software can apply specific rules, helping calculate interest, fees or charges and automatically applying certain logic.

CONTACT DURING BREATHING SPACE
Individuals and debt advisers may contact each other during the breathing space to discuss the debt itself, a debt solution for the debtor, advising them about an additional debt, asking for a review or if one party is not meeting their obligations.

Communication regarding arrears recovery is not allowed during a breathing space, although regulatory notices can still be sent. When processing an SMS, letter or email, our software can flag whether or not the agreement is in an active breathing space and the type of SMS, email or letter template permitted.

As with any regulatory changes, the industry will need to adapt processes to ensure they are familiar with the new rules and processes being enforced. The right software provider can assist lenders in understanding more about consumers who have fallen behind on their payments and found themselves in a breathing space agreement, helping both the consumer and lender understand more about their circumstances and taking action to ensure a positive outcome.

Paul O’Sullivan 
CEO
Aryza Lending Solutions