Breathing Space Scheme


Overview

The Debt Respite Scheme also known as the Breathing Space Scheme (commenced on 4 May 2021) as an additional, temporary debt option administered by an experienced debt adviser. The standard scheme freezes interest and charges and places a holding period on most debts for 60 days. There is a more generous Breathing Space scheme for eligible persons with an approved mental health practitioner. You must satisfy the eligibility criteria to apply.

One Breathing Space per annum Through the standard Breathing Space scheme you can only apply for its temporary protection once a year, this means that the timing of your application needs to be carefully considered with the help of an experienced debt adviser. It is therefore important to work with your debt adviser to progress a debt strategy before the hold period of 60 days ends. The Breathing Space scheme should not be advised to you as a default option when you engage in debt advice, an application needs to be appropriately timed.

Are you eligible?

To be eligible for the standard breathing space you need to meet the criteria below:

  • Live in England or Wales.

  • Not have previous formal breathing space in the last 12 months (this does not include informal breathing space agreed by your creditors or the previous COVID repayment holidays).

  • Be struggling to pay at least one qualifying debt.

  • Not be in a DRO, IVA or be an undischarged bankrupt.

  • A debt adviser must apply on your behalf.

How does it work?

The Breathing Space scheme has to be applied for by a debt adviser who is either FCA regulated or working for a local authority, you cannot make the application on your own. The debt adviser will make checks to see if you are eligible for the scheme, they will also discuss when to apply, and if an application is in your best interests.


You will be required to provide verification documents and details of all of your debts to apply for the scheme.

Your Breathing Space starts the day after your details are put onto the register and this will be confirmed in an email to you.

How does the Breathing Space help me?

When you are accepted onto the Breathing Space Scheme, you will benefit from immediate protections that will:


  1. Stop creditors from contacting you about the debts included.


  1. Give you a break from debt repayments*.


  1. Prevent recovery or enforcement action from either starting or continuing.


  1. Stop interest and charges from being added to your debts.


*Your debt adviser might encourage to you to keep paying certain priority debt repayments if it's in your better interests longer term to do so.

Give me some examples

The Breathing Space Scheme isn't going to suit everyone. It is one of a number of debt options to explore and consider. Here are some examples when it might be an appropriate option:

  • To give you time to access debt advice and/or sell an asset(s) or release equity.

  • To ease the pressure of creditors contacting you, if this is causing a bad affect on your health.

  • Debt repayments stop so that you can focus on paying essential household bills.

  • It may be easier to keep up with priority debt repayments, which in most cases is recommended.

  • Interest and charges are frozen to prevent debt escalating, this might be important if your debt total is near the debt relief order eligibility limit.

  • To stop an enforcement process in its tracks, such as eviction.

  • To stop a bailiff visiting or enforcing a debt.

  • To give you time to apply for a debt solution.

  • To improve your financial position.

NB. 60 days isn't that long so you will need to be committed to stay engaged with the debt advice process to fully benefit.

Will it affect my credit score?

A Breathing Space Scheme application is likely to affect your credit score and credit worthiness (ability to obtain credit). If one of your possible debt options is to consolidate borrowing, and/or to release equity, you might want to carefully weigh up when to, and whether to apply for the Breathing Space Scheme.

However, you should bear in mind that your credit score might already be affected by your financial situation, you can check this by obtaining a free credit report from the following:

The above sites are currently free to access, but please make sure that you cancel any trial subscriptions that you come across, otherwise you may be charged for ongoing services.

Whether there is an impact on your credit score or not, if you are facing imminent enforcement action, such as eviction, applying to the Breathing Space Scheme might be your best option.

Breathing Space Register


Can I leave some of my credit lines out?

You must include all of your debts in a Breathing Space scheme application. This means that if you have a bank overdraft that you regularly use, you will lose access to this line of credit. You can instead open a safe and basic bank account and re-direct income and expenses to the new account. Please visit our web page on Safe and Basic Bank Accounts. Similarly, if you are still using a credit card, you will need to stop using it and include the debt in your application.

Once these credit lines have been added to a Breathing Space application, it might be difficult to re-establish them when it ends. Again, the timing of a Breathing Space application needs careful thought and planning. your debt adviser will help you explore these factors.

Which debts can I include?

Most types of debt can be included in Breathing Space, you must not leave any eligible debts out of your application. Here are some examples:

  • Credit cards

  • Bank Overdrafts

  • Home Credit

  • Loans with Family & Friends

  • Pay Day Loans

  • Parking Fines & Penalty Charge Notices

  • Guarantor Loans (your guarantor is not protected unless they qualify for Breathing Space)

  • Mobile Phone Arrears

  • Loans

  • Rent Arrears

  • Mortgage Arrears

  • Hire Purchase Arrears

  • Secured Loan Arrears

  • Utility Arrears, such as water, gas, electric

  • Council Tax & Business Rates Arrears

  • Income Tax & National Insurance Arrears

Which debts are excluded?

Certain debts do no not qualify for the Breathing Space protections, you will need to still make and maintain payment arrangements with these types of debt.

The following types of debt are excluded:

  • Student loans

  • Budgeting and crisis loans from the Social Fund

  • Universal Credit advance loans

  • Magistrate Court fines (This does not include Penalty Charge Notices)

  • Council tax liabilities which have not yet fallen due

  • Compensation owed by you as a result of a personal injury claim

  • Child maintenance payments and arrears

  • Fraudulent debts

  • Criminal confiscation order payments

  • Secured debts, such as Conditional Sale, Hire Purchase, Mortgage (only arrears for these types of debt can be included in Breathing Space)

  • Certain business debts (i.e. debts from a business registered for VAT, or a partnership with another person and the debt relates solely to the business)

  • New debts incurred during a breathing space are not qualifying debts


If you cannot meet the above ongoing liabilities during the Breathing Space, you must discuss this with your debt adviser as soon as possible.

What if I miss a debt off?

If you miss an eligible debt out of your application by mistake, you can add it in during the Breathing Space. However, the additional debt will only receive the protections until the end of the breathing space period, not for the full 60 days.


If you identify that a debt has been missed off, you should contact your debt adviser to add it as soon as possible to make sure you maximise the protection timescale.

Court Procedures during a Breathing Space

  • A creditor will not be able to start court action against you whilst you are in breathing space.

  • If a creditor has already started court action the court procedures can still proceed, but no enforcement action to try and recover money from you can be taken, e.g. a liability order for council tax can be issued but not enforced.

  • A creditor cannot start bankruptcy proceedings against you or issue a statutory demand.

Attachment of Earnings Orders

If a creditor has already obtained an attachment of earnings order to take money from your wages, a breathing space application will not stop these.

Who qualifies as an approved mental health practitioner?

AMHPs are mental health professionals who have been approved by a local social services authority to carry out certain duties under the Mental Health Act. They are responsible for coordinating mental health assessments and admissions to hospital.


AMPHs might be social workers; nurses; occupational therapists; psychologists.