If you are struggling with debt, Breathing Space is a free scheme backed by the UK government to help ease the stress caused by being in debt.
There are two types of Breathing Space Schemes: the standard Breathing Space Scheme and the Mental Health Crisis Breathing Space Scheme.
In this section, you will find details on the standard breathing space scheme. For more information on the mental ‘health crisis breathing space scheme’, please refer to our section on Mental Health Crisis Breathing Space.
What is Breathing Space?
The free government scheme was set up on the 4th of May 2021 to allow people who are in debt time to get debt advice and set up a suitable debt plan without being chased by creditors for payments or having interest or fees added to their debts.
The scheme does require a person to pass certain eligibility checks; however, once they have met the criteria, they have 60 days of ‘breathing space’ to stop creditors from adding interest, fees or taking legal action.
How is Breathing Space different from a payment holiday?
One thing that people often get confused with Breathing Space is that they assume it is a payment holiday.
Breathing Space is not a payment holiday. A payment holiday is:
- An agreement is agreed upon at the discretion of your creditors.
- When you are on a payment holiday, you do not need to make payments to your creditors, but it does mean that interest rates and fees will still be added on.
- You will also have to make your arrears payment after your payment holiday has finished.
Breathing Space works differently from a payment holiday:
- It does not stop your payments from becoming due. You will still need to do everything you can to pay them.
- With Breathing Space, your interest and charges will temporarily stop. Furthermore, your creditors will not be able to pursue you for payments.
What are the eligibility requirements for Breathing Space?
To make Breathing Space accessible to you, you will need to pass the following eligibility criteria:
- You must live in England or Wales (For Scotland, there is the moratorium period, which is different to Breathing Space)
- You must have a minimum of one creditor you are in debt with
- You must apply for the Breathing Space Scheme through a qualified debt advisor. They must agree that you need time to get advice and are likely to enter a debt solution.
- You must not be on a debt relief order (DRO)
- You must not have an individual voluntary arrangement (IVA)
- You must not be undischarged bankrupt
- You must not be subject to an interim order
- You must not have been on the Breathing Space Scheme in the last 12 months
How long will Breathing Space protect me from my creditors?
The Breathing Scheme will protect you for 60 days if you meet the eligibility criteria. After the 60-day period has ended, creditors will have the authority to collect their debt using the usual channels.
What debts qualify for the Breathing Space Scheme?
The are many debts that can be included in Breathing Space. We have split them into qualifying priority and non-priority debts:
Qualifying Priority debts
- Rent debt and arrears
- Mortgage debt and arrears
- Water debt and arrears
- Gas and Electricity debt and arrears
- Council tax debt
- Business debt
- Income tax debt
- National insurance debt
- HP (Hire Purchase) debt
It is important to note that although Breathing Space allows you to include arrears and debts on your essential bills, you will still need to make sure you are paying your ongoing repayments.
Qualifying Non-Priority debts
- Mobile phone debts
- Credit card debt
- Store card debt
- Bank overdrafts
- Bank loans
- Catalogue debts
- Home-collected credit
- Family or personal debt
- Mortgage shortfalls
- Loans to finance companies
What debts don’t qualify for the Breathing Space Scheme?
There are some debts which can not be included in Breathing space:
- Child Maintenance (CMS) or Child Support (CSA) payments or arrears
- Magistrates court arrears or fines
- Student loan debt
- Crisis loans
- Criminal confiscation order arrears
- Universal credit advances
- Personal injury claims being made against you
- Business debts
What happens if I accidentally leave a debt out of my Breathing Space Scheme?
If you unknowingly leave an eligible debt out of your Breathing Space application, you can add this later.
However, this will not give you protection for the full 60 days until the end of the breathing space period.
What are the advantages of the Breathing Space Scheme?
During your 60 days Breathing Space period:
- You will be protected from an enforcement action being taken against you by your creditors.
- Creditors can’t pursue or force you to make payments whilst on the Breathing Space Scheme.
- You will be able to get advice and look at possible debt solutions to help you get out of debt.
- Interest charges and fees will be frozen on the eligible debts during Breathing Space.
How do I apply for the Breathing Space Scheme, and what is the process?
To apply for the Breathing Space Scheme, you must follow the steps below:
Step One – Make sure you fit the criteria
If you feel you meet the eligibility criteria for the Breathing Space scheme, then you must also consider the following before applying:
- You must get consent from anyone you have joint debts, e.g., partner
- You must be aware that some creditors could stop you from accessing further credit. For example, if you rely on a credit card to pay your essential bills, get in touch with a debt advisor immediately so you can work out what to do next.
- You must make a complete inventory of your debt and tell your debt advisor what debts you have so they can fully understand the situation.
Step Two – Get Debt Advice
Speak to a debt advisor and get advice on whether Breathing Space is the right path for you and whether you meet the criteria to be on the Breathing Space Scheme.
Step Three – Make your application
If you have spoken to a qualified debt advisor and would like to apply for the scheme, then you will need to submit your application to the Insolvency Service, which will deal with your application.
Step Four – The Breathing Space application is registered
Once your application is submitted to the Insolvency Service, they will register your details on a private register by the end of the next working day.
Breathing space and all the protection it will provide will be completed from the day after the registration.
Step Five – Challenges from creditors
Although a debt advisor will have already discussed whether you qualify for the Breathing Space Scheme, during the first 20 days of your application, your creditors can contest your Breathing Space application.
Step Six – Adding more debts
During the 60 days of the Breathing Space scheme, you can add debts to the scheme, however the:
- Debts being added must have existed before the Breathing Space began. Debts can not be added if they happened after your Breathing Space came into effect.
- Protection will only apply to the remainder of the 60 days. For example, if you add new debts to the scheme on day 15, your protection for those debts will only last for 45 days.
Step Six – Your 30-day review
After 30 days, your situation will be reviewed to see how you are getting on with your scheme. In most cases, the scheme will run its entire course of 60 days.
It is only under certain circumstances that the scheme will be cancelled. This will be under the discretion of the debt advisor.
Will my credit rating be affected if I am on a Breathing Space Scheme?
Whilst you are on the Breathing Space Scheme, creditors can still report any missed payments to the credit reference agencies.
However, creditors cannot inform the credit reference agency that you are on in Breathing Space.
Only individual lenders who have been included in your Breathing Space Scheme can keep a record of you being on a Breathing Space Scheme. As a result, this could affect their lending to you in the future.
What is the Breathing Space Register?
The Insolvency Service keeps the Breathing Space register. Basic details such as your name and address can be added to the Breathing Space register.
Only your debt advisor and creditors can access your details, which means it is not accessible to the public.
What will the Bailiffs or enforcement agents do if I have Breathing Space?
Bailiffs (also known as enforcement agents) are agents whom the creditors employ to recover debts from people. There are some essential things you need to know about bailiff action:
- A creditor will not be able to start bailiff action whilst you are in Breathing Space.
- A bailiff is not allowed to take control of your goods if you are on the Breathing Space Scheme.
- A bailiff cannot take action while you are on the breathing space scheme.
- If bailiffs have taken items from your property before your Breathing Space has started, they are allowed to sell these. However, whilst the Bailiffs are trying to sell your goods, e.g. car, televisions, they can’t charge you for storing these items when you are in a Breathing Space agreement or after.
- It is essential to know your rights with the bailiffs. They should adhere to the correct rules; however, if bailiffs try to act when you are in Breathing Space, then you must show your Breathing Space documentation and contact your debt advisor for advice on how best to deal with this.
Note: These above are generic rules your bailiffs must abide by. However, practices can differ depending on the type of debt a bailiff collects.
Can my creditors take me to court whilst I am in Breathing Space?
Receiving a court letter makes the debt feel even more real, and the consequences are often more severe. However, this is where Breathing Space helps those in this situation. Here are a few points you should consider.
- Creditors can’t start court action against you whilst you have a Breathing Space agreement.
- Creditors can’t start the bankruptcy process or issue you with statutory demand whilst you have Breathing Space in place.
- Creditors who have already started court action should not be able to recover money from you or appoint bailiffs on their behalf to obtain the debt owed.
- Creditors can get an attachment of earnings to make money from your wages while in Breathing Space.
What is the Mental Health Crisis Breathing Space Scheme?
Mental Health Crisis Breathing Space is for people receiving mental health crisis treatment and having issues with debt.
The scheme offers you everything the standard Breathing Space scheme entails and other forms of protection.
How is the Mental Health Crisis Breathing Scheme different to the Standard Breathing Scheme?
- The Mental Health Crisis Breathing Scheme will last for the entire duration of your mental health treatment, plus 30 days.
- The Mental Health Crisis Breathing Scheme does not require you to receive advice or find a solution to get you out of debt.
- You can have someone talk to the debt advisor on your behalf
- The number of times you apply and register for the Mental Health Crisis Breathing Scheme is unlimited.
- You can apply for the Mental Health Crisis Breathing Scheme if you have been on the Standard Breathing Scheme in the last 12 months.
- The Mental Health Crisis Breathing Scheme gives you the same rights as a Standard Breathing Space Scheme. For more details, visit our sections on this.
How long does the Mental Health Crisis Breathing Space Scheme last?
The Mental Health Crisis Breathing Scheme is judged case-by-case as everyone’s mental health treatment is different. As a result, your scheme will only end 30 days after your mental health treatment ends.
It is important to note that your debt advisor can also stop the agreement. If your debt advisor does not receive a response when asking about the details or status of your ongoing mental health, then they are allowed to end the scheme 30 days after this.
How do I apply for the Mental Health Crisis Breathing Space Scheme?
If you would like to apply for the Mental Health Crisis Breathing Space Scheme, you can get someone to use it on your behalf. The following practitioners or people can apply on your behalf:
- Approved Mental Health Professionals (AMHP)
- Your Carer
- A mental health nurse
- A social worker
To speed up the process, if you can get confirmation from your AMHP that you are receiving mental health crisis treatment, you can add that as evidence when submitting your application to your debt advisor.
You can find out more about applying for a mental health Breathing Space on the UK Government website here.
I want to discuss Breathing Space or the Mental Health Crisis Breathing Space Scheme.
If you have more questions regarding the Breathing Space Schemes, then get in touch and speak to one of our debt advisors.
If you feel ready to apply for the Breathing Space Scheme, we can help put that application together. Get in touch to find out more.