Breathing Space (Debt Respite Scheme)

What it is

Breathing Space is a statutory scheme introduced in May 2021 under the Breathing Space Moratorium and Mental Health Crisis Moratorium (England and Wales) Regulations 2020. It provides two types of protection: a standard Breathing Space and a Mental Health Crisis Breathing Space.

The standard Breathing Space gives you up to 60 days of protection from creditor action. The Mental Health Crisis Breathing Space is available for people receiving mental health crisis treatment and lasts for the duration of treatment plus 30 days.

Who it may apply to

Breathing Space may be suitable if you:

• Are struggling with debt and need time to seek advice
• Want temporary protection from creditor contact and action
• Are ready to engage with a debt adviser to find a longer-term solution
• Live in England or Wales
• Have qualifying debts (most personal debts are included)

How it works

Breathing Space can only be started by a debt adviser — you cannot apply for it yourself. The adviser must be authorised by the Insolvency Service to initiate Breathing Space.

When you contact a debt adviser (such as StepChange, Citizens Advice or National Debtline), they will assess your situation. If they determine that you are eligible, they will submit a Breathing Space application on your behalf.

Once the application is accepted, your creditors are notified. From that point, for 60 days:

• Creditors cannot contact you about the debts included in the Breathing Space
• Interest, fees and charges on those debts are frozen
• Creditors cannot take enforcement action (e.g. bailiff visits, court action)
• You must continue to pay essential bills that arise during this period (e.g. rent, council tax, utilities)

Advantages and disadvantages

Breathing Space is a valuable tool, but it is important to understand what it is and is not.

Advantages

• Immediate legal protection from creditor contact and action
• Interest and charges are frozen for the duration
• Gives you time to get advice and decide on a longer-term solution
• Free to access — no fees
• Can be started quickly through any authorised debt adviser

Disadvantages

Consider these limitations:

Disadvantages

• It is temporary — 60 days is the maximum for the standard scheme
• It does not write off any debt — your debts still exist
• It is not a solution in itself, but a stepping stone towards one
• Some debts are excluded (e.g. ongoing mortgage payments, child maintenance)
• Your creditors are told that you have entered Breathing Space
• You must engage with a debt adviser — if you do not, the Breathing Space can be cancelled

Eligibility and qualifying conditions

To qualify for a standard Breathing Space:

• You must live in England or Wales
• You must have qualifying debts (most unsecured personal debts qualify)
• You must not already be in a Breathing Space or have had one in the last 12 months (with some exceptions)
• You must not be in an active IVA or bankruptcy at the time of application
• A debt adviser must assess that you are likely to benefit from the scheme

What happens to creditors

Once Breathing Space starts, creditors are notified by the Insolvency Service. They must immediately stop all collection activity related to the debts included in the scheme. This includes letters, phone calls, emails, home visits, and legal action.

Creditors are also prohibited from adding interest, late payment fees, or any other charges to the debts during the Breathing Space period.

If a creditor contacts you during Breathing Space, you should inform your debt adviser. The creditor may be in breach of the regulations.

Creditors can still send you routine statements (e.g. mortgage statements) but cannot chase you for included debts.

What happens to debts

During Breathing Space, your debts are frozen — not written off. The amounts you owe remain the same, but no interest or charges are added. You are not required to make payments towards the included debts during this period.

However, you must continue to pay any essential bills that fall due during the Breathing Space, such as your rent, mortgage, council tax, and ongoing utility bills. These are not debts that are "frozen" — they are ongoing living costs.

At the end of the 60 days, Breathing Space ends and your creditors can resume normal collection activity. Interest and charges may start accruing again. This is why it is essential to use the 60 days to get advice and put a longer-term solution in place.

Costs and fees

Breathing Space is completely free. There are no fees, charges, or costs to you. The scheme is funded by the Insolvency Service, and debt advisers provide their services at no cost to you.

How long it normally lasts

A standard Breathing Space lasts for 60 days from the date it starts. It cannot be extended beyond 60 days.

A Mental Health Crisis Breathing Space lasts for the duration of your mental health crisis treatment, plus 30 days after treatment ends. There is no fixed time limit — it depends on how long your treatment lasts.

Breathing Space ends automatically at the end of the period. Your debt adviser will help you have a longer-term solution in place before it ends.

Potential consequences

Breathing Space has relatively few direct consequences compared to other debt solutions, but there are some things to note:

• Your creditors are informed that you have entered Breathing Space
• It does not appear as a separate entry on your credit file, but the underlying debts may already be affecting your credit
• If you do not engage with a debt adviser, the Breathing Space can be cancelled early
• Once Breathing Space ends, creditors can resume collection activity — so you need a plan in place
• Taking Breathing Space does not prevent you from entering a formal debt solution afterwards

Alternatives

Breathing Space is not a debt solution in itself — it is a temporary protection. After (or instead of) Breathing Space, you may consider:

• Debt Management Plan (DMP) — informal repayment at an affordable rate
• Individual Voluntary Arrangement (IVA) — formal solution with debt write-off
• Debt Relief Order (DRO) — for low income and low debt
• Bankruptcy — for significant debt with no repayment prospect
• Administration Order — for debts under £5,000 with a CCJ
• Debt consolidation — combining debts into a single manageable payment