Breathing Space scheme

If you're struggling with unaffordable debt, you may be able to request temporary protection from your creditors while you work with a debt adviser to find a suitable debt solution. This is known as the Debt Respite Scheme (Breathing Space) and is designed to give you a much-needed break from the pressure and stress of problem debt.

The initiative, which was introduced by the UK government in 2021, provides legal protection from your creditors for a set period (typically 60 days) so you can focus on meeting your repayments without being threatened with legal action from the people you owe. 

What is the Breathing Space scheme?

"During the scheme, your creditors can't take legal action against you and all interest and charges on the debt will be frozen."

Breathing Space is a legally enforced scheme that gives people struggling with debt some much-needed 'breathing space' to deal with their debts without being put under further pressure from creditors or debt collectors.

There are two types of Breathing Space, Standard Breathing Space and Mental Health Crisis Breathing Space (or Mental Mental Health Breathing Space), each with its own eligibility criteria, application process, and duration.

During the scheme, your creditors can't take legal action against you and all interest and charges on the debt will be frozen. This means you can't be taken to court or visited by bailiffs and you don't have to worry about any extra fees being added.

However, it's worth remembering that while you'll be given temporary protection from your creditors and will be safe from legal action, you'll be expected to continue making your debt repayments as normal.

How do I apply for Breathing Space?

The process of applying for Breathing Space is fairly straightforward. Here is a brief guide to what you can expect:

Submit an application

The only way to apply for the scheme is through an approved debt adviser or debt advice provider. They will review your financial situation, submit an application on your behalf, and discuss your options for getting out of debt. Depending on your circumstances, you may be able to get someone to talk to a debt adviser for you.

Wait for protection to begin

Usually, legal protection will begin within 48 hours of your application being received. During the first 20 days, your creditors can challenge your application as well as any specific debts included as long as they provide evidence to support their claim. This can happen if they believe you don't meet the eligibility criteria or believe you have the funds to pay your debts as they're due.

Add debts to the scheme

During the scheme, you can add debts as long as they existed before your protection began. The 20-day window for your creditor to challenge the debt will also restart each time a debt is added, but only for that debt. For example, if you add a debt 30 days in, the creditor for that debt will have 20 days from that date to challenge it.

Attend a 30-day review

Once 30 days have passed, you'll be asked to attend a mid-way review with your debt adviser or debt advice provider. However, this is only to ensure you are fulfilling your side of the agreement and as long as you're engaging with the advice you've been given, your protection will continue for the remaining 30 days.

Why should I apply for Breathing Space?

Breathing Space can help alleviate the stress of dealing with debt and remove the need to worry about your creditors taking legal action against you. Here are some of the other reasons why you should consider applying for the scheme:

• Your creditors can't add any interest, fees, or penalties to your debt
• You can't be asked to pay a debt included in the scheme by a creditor or debt collection agency
• No enforcement action can be taken for any debts included in the scheme
• You'll work closely with a debt adviser for expert advice on how best to deal with your debt

Am I eligible for Standard Breathing Space?

To be eligible for Standard Breathing Space, you must:

• Live in England or Wales and have at least one qualifying debt
• Be unable to repay your debts 'as they're due' (on time)
• Not be in a formal debt solution, such as an Individual Voluntary Arrangement (IVA) or Debt Relief Order (DRO)

Am I eligible for Mental Health Crisis Breathing Space?

To be eligible for Mental Health Crisis Breathing Space, you must:

• Be receiving mental health treatment from a crisis home treatment team, liaison mental health team, community mental health team, or any other specialist mental health crisis service as confirmed by an approved mental health professional (AHMP)
• Have been detained under most sections of the Mental Health Act (also known as being sectioned)
• Have been removed to a place of safety under the Mental Health Act

Which debts are covered by Breathing Space?

Most personal debts are covered by the scheme, including both priority and non-priority debts, and you can't leave any qualifying debts out of your application.

For secured debts, such as mortgages and hire purchase agreements, you can't include the secured lending itself and will be expected to continue making payments as normal. However, you can include any arrears you may have.

Remember, while you can add debts to the scheme at any time as long as they existed before you applied, the timer won't restart once they are added and they will only be protected for the remainder of the 60 days. For example, if you add a debt 30 days in, it will only be protected for the remaining 30 days.

Some of the debts that can be included in the scheme include:

• Mortgage and rent arrears
• Gas and electricity arrears
• Council tax arrears
• Credit cards
• Store cards
• Overdrafts
• Personal loans
• Catalogues
• Mobile phone bills
• Mortgage shortfalls

Some debts can't be included in the scheme, and it's important to know what these are before you apply. They include:

• Magistrates' Court fines
• Child Maintenance Service (CMS) arrears
• Student loans
• Universal Credit (UC) advance payments
• Fraudulent debts
• Crisis loans

What should I do during Breathing Space?

"If your circumstances change at any point during the 60 days (e.g. you lose your job or receive a wage increase or decrease), you must inform your debt adviser as soon as possible."

There are some things you must do while you're under legal protection from your creditors and your debt adviser can contact you at any point to ensure you're still fulfilling your obligations. Failure to meet these requirements can result in your debt adviser cancelling the scheme and your creditors will be free to take action against you as usual.

Here are some of the things you must remember to do during the 60 days:

Make payments as normal

There's a common misconception that you don't have to make payments while you're in the scheme, but this isn't true and you must continue paying your 'ongoing liabilities' as normal if you can. This includes your mortgage, rent, council tax, utilities, and insurance payments.

Inform your debt adviser if your circumstances change

If your circumstances change at any point during the 60 days (e.g. you lose your job or receive a wage increase or decrease), you must inform your debt adviser as soon as possible. They will then review the situation and issue new advice that better suits your circumstances.

Limit your credit applications

During the scheme, you can't take out credit that amounts to more than £500 alone or jointly with another person. This is to protect you from racking up further debt and allow you to focus on finding a solution to deal with your existing debt load.

Communicate with your debt adviser

Communicating with your debt adviser throughout the scheme can reassure them that you are committed to finding a solution to deal with your debts. This includes responding to any emails, phone calls, and letters and attending virtual or face-to-face meetings if invited.

What happens when Breathing Space ends?

Before you apply for the scheme, it's important you know what to expect when your protection ends. Once 60 days have passed, you'll be notified that the scheme has come to an end and the restrictions on your creditors will be lifted. This means they will be free to:

• Start adding interest, fees, and penalties
• Start enforcement action
• Resume or start legal proceedings

Breathing Space is designed to help you find a long-term solution to deal with your debts. By working with your debt adviser to find an appropriate debt solution within 60 days, you can start the process of writing off your debts and prevent your creditors from taking legal action against you.

Is there anything else I should know about Breathing Space?

Breathing Space can give you the time you need to reevaluate your debt and find a long-term solution that works for you and your creditors. However, it's important you know exactly what to expect from the scheme before you apply.

For example, despite having different names and eligibility criteria, Standard Breathing Space and Mental Health Crisis Breathing Space provide the same protections. However, Mental Health Crisis Breathing Space can protect you for longer by lasting for the duration of your mental health crisis treatment plus another 30 days.

Mental Health Crisis Breathing Space also does not require you to seek debt advice or find a debt solution and - unlike Standard Breathing Space which you can only apply for once in a 12-month period - there is no limit to the number of times you can use the scheme (even if you've also had Standard Breathing Space in the last 12 months).

What debt solutions are available to me?

While you're in the scheme, your debt adviser will likely discuss some debt solutions with you that can help you get out of debt. These may include:

Debt Relief Order (DRO)

A Debt Relief Order (DRO) is often viewed as a less serious alternative to bankruptcy and is a way to deal with your debts if you owe less than £30,000 and don't have much spare income or assets. When you enter a DRO, you won't have to make payments for 12 months and your creditors can't force you to repay your debts.

Once your DRO comes to an end and your financial situation hasn't improved or shown signs of improvement, your debts will be written off.

Individual Voluntary Arrangement (IVA)

A Debt Management Plan (DMP) is a way of repaying your debts where your payments are based on what you can comfortably afford. They are typically recommended when you're juggling multiple debts and can only afford to make small payments to your creditors each month.

Once your IVA comes to an end (after five or six years), any remaining debts will be written off and you'll be officially declared debt-free.

Debt Management Plan (DMP)

A Debt Management Plan (DMP) is a way of repaying your debts where your payments are based on what you can comfortably afford. They are typically recommended when you're juggling multiple debts and can only afford to make small payments to your creditors each month.

Because a DMP requires you to repay your outstanding balance in full, it can last anything from five to ten years depending on your total debt level.

Bankruptcy

Bankruptcy is a legal process designed for people who have debts of over £5,000 and is generally seen as a last resort when other debt solutions have been unsuccessful. With bankruptcy, you must agree to hand over your assets (e.g. your home, car, and non-essential belongings) to the person appointed to handle your arrangement. They can then sell them to raise the money needed to repay your debts.

Once your bankruptcy period ends (after 12 months), your debts will be written off as long as your financial situation hasn't improved.

Conclusion

Dealing with debt can be exhausting and it's normal to just want to snap your fingers and get a break from it all. However, depending on your circumstances, you may be eligible for a government scheme that temporarily prevents your creditors from taking action against you for 60 days.

Breathing Space is designed to give you some much-needed 'breathing space' from your creditors, allowing you to work with a debt adviser to find a long-term debt solution without any unnecessary stress or pressure from the people you owe. During this time, you'll still need to make payments to your ongoing liabilities as normal.

There are various debt solutions available to help you deal with your debts, like a DRO, IVA, DMP, and bankruptcy. By entering into a debt solution during the 60 days, you can prevent your creditors from taking action against you once your protection ends.