What is breathing space?

Breathing space is a free Government-backed scheme allowing individuals time to get debt advice to help relieve the stress caused by debt.

Breathing space allows you to focus on getting debt advice and come to a debt solution without worrying about incurring additional charges or being harassed for payment. A debt solution could be a plan to pay off your debts or a way to get them written off.

There are two breathing space schemes you may be eligible for:

• Standard breathing space scheme.
• Mental health crisis breathing space scheme.

The standard scheme is suitable if you have a mental health condition but are not currently in crisis treatment. If you are currently in crisis treatment, you will enter the mental health crisis breathing space scheme.

Breathing space scheme

The breathing space scheme is available to people who have a problem with debt and are seeking debt advice.

If you pass the eligibility checks, the scheme prevents creditors from enforcing the debt or adding interest and charges for up to 60 days. You can apply for this scheme only once every 12 months.

Breathing space is not a payment holiday. Therefore, you will need to continue paying your debts during your breathing space. However, if you can't pay, you will be protected from action taken against you.

Mental health crisis breathing space scheme

The mental health crisis breathing space is specifically for people currently receiving mental health crisis treatment. This must be certified by an Approved Mental Health Practitioner (AMHP).

This scheme lasts for as long as the person is in crisis treatment plus an additional 30 days. There are also no limits to how many times you can apply for this scheme.

Find out how to apply for a mental health crisis breathing space.

How to apply for the breathing space scheme

To apply for the breathing space scheme, you must:

• Be an individual,
• Live in England or Wales,
• Owe a 'qualifying' debt to a creditor.

And you must not:

• Been on the breathing space scheme in the past 12 months (not including the mental health crisis breathing space),
• Be an undischarged bankrupt,
• Be subject to a Debt Relief Order (DRO), an interim order, or have an individual voluntary arrangement (IVA).

Once it is determined that you are eligible, your debt adviser will submit your breathing space application to the Insolvency Service.

What happens during a breathing space?

1. Seek debt advice: You can only get breathing space if you are getting help to solve your debt problem.
2. Apply for breathing space: Your debt adviser will submit your application to the Insolvency Service.
3. Start of breathing space: Once your application has been submitted, the breathing space will start. This is usually within two days.
4. The first 20 days: During the first 20 days, creditors can challenge your application and any specific debt included in the scheme.
5. After 30 days: Your debt adviser will review your application and decide whether your breathing space should continue.
6. After 60 days: Your breathing space will end.

What debts qualify for breathing space?

Many debts qualify for breathing space, including:

• Credit cards.
• Store cards.
• Personal loans.
• Payday loans.
• Overdrafts.
• Arrears on utility bills.
• Mortgage arrears.
• Rent arrears.
• Council tax debts.
• Tax debts.
• Welfare benefit overpayments (unless they are fraudulent).
• Penalty charge notices.

Joint debt

Joint debts can be included in breathing space, even if only one person goes into the scheme.

The joint debt would become a breathing space debt, and creditors cannot enforce the debt against either person who owes them money. However, creditors can still charge the other person interest or fees. The breathing space does not affect any other debts that person has in their name.

Guarantor loans

Guarantor loans can be included in breathing space, but the creditor can still take action against the guarantor. The guarantor can apply for their own breathing space if they're eligible.

What debts don't qualify for breathing space?

The following debts do not qualify for breathing space:

• Secured debts (like mortgages, hire purchase or conditional sale agreements). You can only include arrears on secured debts.
• Debts incurred after you have started breathing space.
• Fraudulent debts.
• Magistrates Court fines.
• Child maintenance or any money owed from family court proceedings.
• A crisis or budgeting loan from the social fund.
• Student loans.
• Personal injury damages.
• Universal Credit advanced payments.

What do I need to do during my breathing space?

While on the breathing space scheme, you must:

• Tell your debt adviser about any debts that were missed during the application.
• Tell your debt adviser about any changes to your circumstances.
• Not take out further credit of £500 or more.
• Keep in contact with your debt adviser.
• Pay your ongoing liabilities.
• Continue to make payments to your creditors if you can afford to.

Paying your ongoing liabilities means that you keep paying the standard payments to your bills.

For example, if you have rent arrears, the rent arrears will be included in the breathing space. But you must keep on paying your regular rent payment to make sure your rent arrears do not increase.

What can and can't my creditors do when I'm on the breathing space scheme?

Once you have entered a breathing space, your creditors can't:

• Charge you further interest, fees or charges on the debts listed in your breathing space.
• Take any enforcement action.
• Instruct enforcement agents or bailiffs to recover the debt.

However, creditors can:

• Accept payments.
• Ask your debt adviser to cancel the breathing space if they feel you are not eligible for breathing space.
• If your debt adviser does not agree to cancel the breathing space, the creditor can apply to the court to cancel it.

What happens after breathing space?

Depending on your circumstances, there could be several outcomes once your breathing space has ended.

If your debt solution has been set up

If you entered a debt solution during your breathing space period, then your breathing space will end early.

If your debt solution was to make a payment plan with your creditors, you should ensure that you begin making these payments.

If your debt solution hasn't been set up

If you have not entered a debt solution, you do not need to take any action. However, your creditors will automatically be notified that you are no longer in breathing space after 60 days.

If you need more time, you can contact your creditors and request an informal hold on your account, which they may agree to.

You cannot enter another standard breathing space within 12 months of your last one. However, if you become eligible for mental health crisis breathing space, you can apply for this as soon as your crisis treatment begins.

What can creditors do after my breathing space has ended?

Once your creditors have been informed your breathing space has ended, they can:

• Apply interest, charges, fees and penalties to your debt. However, they are not entitled to request anything accrued during the breathing space period unless a court order allows them.
• Start or resume court action to recover the debt.
• Contact you to reclaim the debt.

In England, Mental Health & Money Advice run the single point of entry for a mental health crisis breathing space. Citizens' Advice operates the scheme in Wales.