Debt Breathing Space Scheme: Who Qualifies and How It Works

The Debt Respite Scheme, commonly known as Breathing Space, is a legal mechanism that gives individuals in problem debt a period of protection from creditor action. It applies in England and Wales only. Scotland operates a separate Debt Arrangement Scheme, and Northern Ireland is not covered by this scheme.

The scheme is established under The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (Statutory Instrument 2020/1311). It came into force on 4 May 2021. The Insolvency Service maintains the electronic register through which breathing spaces are administered, and the Financial Conduct Authority regulates the debt advice providers who can initiate them.

There are two types of breathing space. The first is a Standard Breathing Space, which provides up to 60 days of legal protection. The second is a Mental Health Crisis Breathing Space, which lasts for the duration of a person's mental health crisis treatment plus an additional 30 days after that treatment ends. The two types share a common framework but differ in their eligibility criteria, duration, and certain obligations placed on the debtor during the protected period.

Breathing Space is a formal, time-limited legal protection for people in problem debt who live in England or Wales. During a breathing space, most creditors must pause enforcement action, stop contacting the debtor about their debts, and freeze most interest and charges on qualifying debts.

A Standard Breathing Space lasts up to 60 days. A Mental Health Crisis Breathing Space lasts for the entire duration of the person's crisis treatment, plus 30 days afterwards, with no fixed maximum duration. Neither type can be entered into directly by the debtor — both require an FCA-authorised debt advice provider (or a local authority providing debt advice to its residents) to assess eligibility and register the breathing space with the Insolvency Service.

A debtor cannot have a new standard breathing space if they have had one within the previous 12 months. There is no such restriction on mental health crisis breathing spaces, and there is no limit on how many times a person can enter a mental health crisis breathing space.

The breathing space process begins when a person in problem debt contacts an FCA-authorised debt advice provider or a local authority that provides debt advice to its residents. Debt advice providers are not permitted to charge for providing this advice or for entering a debtor into breathing space.

The debt adviser carries out an assessment of the person's financial situation and determines whether they meet the eligibility criteria. If the adviser is satisfied that the person qualifies and that breathing space is appropriate, they initiate the process by entering the debtor's details onto the Insolvency Service's electronic register. The breathing space formally begins the day after the debtor's details are placed on the register.

Once registered, the Insolvency Service sends notifications to the debtor's creditors. Electronic notifications are sent on the same day. Postal notifications are deemed to have been received four business days after posting. From the date set out in the notification, creditors are legally required to apply the breathing space protections.

During a standard breathing space, the debt adviser conducts a midway review between day 25 and day 35. This review assesses whether the debtor is complying with their obligations under the scheme.

For a mental health crisis breathing space, the process involves periodic verification rather than a single midway review. The debt adviser contacts a nominated point of contact to verify that the debtor is still receiving crisis treatment. This first check takes place between 20 and 30 days after the breathing space starts, and is then repeated at intervals of every 20 to 30 days for as long as treatment continues. If no response is received confirming ongoing treatment, the breathing space ends 30 days after the date on which no response was provided.

A standard breathing space ends 60 days from its start date, unless it is cancelled earlier. It also ends the day after cancellation by a debt adviser or court, or the day after the debtor's death. A mental health crisis breathing space ends 30 days after mental health crisis treatment ends.

Eligibility for Standard Breathing Space

To be eligible for a standard breathing space, a person must meet all of the following conditions. The debtor must be an individual — companies and partnerships as legal entities cannot apply, though sole traders can. The debtor must owe at least one qualifying debt to a creditor. They must live or usually reside in England or Wales. The debt adviser must be satisfied that the person cannot, or is unlikely to be able to, repay all or some of their debt, and that breathing space is appropriate for them. According to published guidance, a breathing space may not be considered appropriate if the debtor has accessible funds, assets that could be sold, or can enter a suitable debt solution immediately without needing protections.

The debtor must not, at the time of application, have any of the following: a Debt Relief Order, an Individual Voluntary Arrangement, an interim order, or be an undischarged bankrupt. The debtor must not already be in a breathing space and must not have had a standard breathing space within the previous 12 months.

Eligibility for Mental Health Crisis Breathing Space

To qualify for a mental health crisis breathing space, the debtor must meet all of the standard eligibility criteria listed above and must also be receiving "mental health crisis treatment" at the time of application. This must be certified by an Approved Mental Health Professional (AMHP), who is approved under section 114(1) of the Mental Health Act 1983. A GP cannot make this certification, though they may refer a person to an AMHP.

"Receiving mental health crisis treatment" is specifically defined in the regulations and means one of three things: being detained in hospital for assessment or treatment under the Mental Health Act 1983; being removed to a place of safety by a police constable under the Mental Health Act 1983; or receiving crisis, emergency, or acute care or treatment from a specialist mental health service for a mental disorder of a serious nature. The High Court held in Kaye v Lees [2023] EWHC 152 that the disorder should be of equivalent severity to one requiring detention in hospital or removal by police, but where treatment can be provided without the debtor being assessed, removed, or detained without their consent.

A debtor who has had a standard or mental health crisis breathing space within the previous 12 months may still be eligible for a mental health crisis breathing space. There is no limit on how many times a person can enter a mental health crisis breathing space.

Key Numerical Thresholds

The scheme operates around several fixed time periods that are important to understand.

The standard breathing space lasts a maximum of 60 days from its start date. The mental health crisis breathing space continues for the duration of crisis treatment, plus 30 days after treatment ends, with no fixed maximum. The exclusion period between standard breathing spaces is 12 months — a debtor cannot enter a new standard breathing space within 12 months of a previous one. This restriction does not apply to mental health crisis breathing spaces.

Creditors have 20 days from the start date of a breathing space (or 20 days from when an additional debt is added) to request a review. If a creditor has completed a review and disagrees with the outcome, they may apply to court to cancel the breathing space within 50 days from the start date (or 50 days after notification of an additional debt), though they cannot apply before the debt adviser's review is completed.

Additional debts identified after a breathing space has started can be added up to 45 days after the breathing space began. If additional debt is notified more than 45 days after the start, the debt adviser may decide not to add it.

Where legal proceedings time limits (for enforcement or new claims) would have expired during a breathing space, those time limits are extended to eight weeks after the breathing space ends.

Qualifying Debts

Qualifying debts include: credit cards, store cards, personal loans, payday loans, overdrafts, utility bill arrears, mortgage or rent arrears, government tax and benefit debts (unless specifically excluded), council tax arrears, benefit overpayments, and buy now pay later debts. Council tax qualifies only if all instalments for the financial year have fallen due and not been paid, or if a reminder notice has been served.

Excluded Debts

The following debts are excluded from breathing space: secured debts (except arrears existing at the application date), debts arising from fraud or fraudulent breach of trust, court fines, confiscation orders, child maintenance, family court obligations, crisis or budgeting loans from the social fund, student loans, damages for death or personal injury, Universal Credit advance payments, council tax liabilities not yet fallen due, and business debts under certain conditions (detailed below in edge cases). Debts incurred during the breathing space are generally not qualifying debts.

One of the most frequently misunderstood aspects of the scheme is the difference between the two types of breathing space and their eligibility rules. The 12-month restriction between breathing spaces applies only to the standard type. A person who has recently had any type of breathing space can still enter a mental health crisis breathing space, provided they meet the eligibility criteria. There is no cap on how many mental health crisis breathing spaces a person can have.

Another point of confusion concerns ongoing liabilities. During a standard breathing space, the debtor is expected to continue paying ongoing financial commitments such as mortgage payments, rent, utilities, taxes, and insurance. Non-payment of these ongoing liabilities may result in the breathing space being cancelled. This obligation does not apply during a mental health crisis breathing space.

The treatment of secured debts also causes confusion. A mortgage or hire purchase agreement is a secured debt, and the debt itself is excluded from breathing space. However, any arrears that exist at the date of the application can be included as a qualifying debt. Interest can still be charged on the principal amount of the secured debt during the breathing space, but interest and charges on the arrears are frozen.

Council tax is another area that generates confusion. It only qualifies as a breathing space debt under specific circumstances — either all instalments for the financial year must have fallen due and not been paid, or a reminder notice must have been served. Council tax liabilities that have not yet fallen due are excluded.

The role of the debt adviser is sometimes misunderstood. A debtor cannot enter breathing space on their own. The process must be initiated by an FCA-authorised debt advice provider or a local authority providing debt advice. The adviser acts as a gatekeeper, assessing both eligibility and appropriateness.

Finally, the scheme's geographic scope is a source of confusion. It applies only in England and Wales. Individuals living or usually residing in Scotland or Northern Ireland are not eligible, even if their creditors are based in England or Wales.

Joint Debts

Joint debts can be included in a breathing space even if only one of the joint debtors applies. When a joint debt becomes a breathing space debt, the creditor must apply the enforcement protections to the other joint debtor or debtors as well. However, the creditor can still charge the other joint debtor or debtors interest and fees on the joint debt. The breathing space does not affect the other person's individual debts.

Guarantor Loans

Guarantor loans can be included in a breathing space, but the protections do not extend to the guarantor. The guarantor may apply for their own breathing space if they are independently eligible.

Secured Debt Arrears

As noted above, arrears on secured debts (such as mortgages and hire purchase agreements) that exist at the application date can be included. However, any new arrears that arise during the breathing space are not protected. Interest continues to accrue on the principal of the secured debt, but not on the protected arrears.

Business Debts

Sole traders can apply for breathing space, but business debts face significant restrictions. Business debts do not qualify if the debt relates solely to the business (and not to the individual personally) and the debtor is either VAT-registered or is a partner in a business with someone else.

Existing Enforcement Measures

Attachment of earnings orders that were in place before the breathing space began may continue during the protected period. This is an exception to the general pause on enforcement action.

Existing deductions from Universal Credit are also not covered by breathing space protections. Creditors are not expected to notify the Department for Work and Pensions to stop Universal Credit deductions. However, deductions from other benefits — Employment and Support Allowance, Jobseeker's Allowance, Income Support, and Pension Credit — should be notified to stop.

Bailiff Action Already Underway

If a bailiff or enforcement agent has taken control of goods by physically removing and securing them at another location before the breathing space started, those goods may be sold during the breathing space. However, fees that accrue during the breathing space for storing those goods cannot be charged during or after the breathing space.

Protection of the Debtor's Address

Where there is a risk that disclosing the debtor's usual residential address would reasonably be expected to lead to violence against them or someone who normally lives with them, the debt adviser may withhold that address from creditors and from the register.

Breathing space creates a legally enforceable pause in the relationship between a debtor and their creditors. During this period, creditors must stop most enforcement action, halt contact about debts included in the breathing space, and freeze most interest and charges. The debtor gains time to work with a debt adviser to assess their situation and explore potential next steps without the pressure of active creditor pursuit.

For a standard breathing space, the 60-day clock is fixed. During that period, the debtor is expected to engage with their debt adviser and continue paying ongoing liabilities. The midway review between days 25 and 35 serves as a check on the debtor's compliance with these obligations. Failure to comply may lead to the breathing space being cancelled.

For a mental health crisis breathing space, the protections are more expansive in duration and the obligations on the debtor are less prescriptive. The breathing space continues for as long as the person is receiving qualifying crisis treatment, with the 30-day extension providing a buffer once treatment ends. There are no requirements to continue paying ongoing liabilities during this type of breathing space, and the periodic treatment verification checks replace the midway review.

Creditors who believe a breathing space has been incorrectly applied have a formal challenge process. They may request a review within 20 days of the start date. If unsatisfied with the outcome of that review, they may apply to court within 50 days of the start date, but only after the debt adviser's review is complete.

Once a breathing space ends, creditors may resume normal collection and enforcement activity. Where statutory time limits for legal proceedings would have expired during the breathing space, those limits are extended to eight weeks from the end date of the breathing space, giving creditors a window to take action they were prevented from pursuing.

• Firm Obligations: The Debt Respite Scheme (Breathing Space) provides a legally enforceable pause on most creditor action for individuals in problem debt in England and Wales. Standard breathing space lasts up to 60 days. Mental health crisis breathing space lasts for the duration of crisis treatment plus 30 days, with no fixed maximum. Both types must be initiated through an FCA-authorised debt advice provider or a qualifying local authority, and cannot be entered into directly by the debtor.
• Key Boundaries: The scheme applies in England and Wales only; a 12-month exclusion period applies between standard breathing spaces but not mental health crisis ones; ongoing liabilities must continue to be paid during a standard breathing space; and certain debts — including student loans, child maintenance, court fines, and most secured debt principal — are excluded.
• Legal Basis: The scheme is governed by The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (SI 2020/1311), with oversight from the Insolvency Service and the Financial Conduct Authority. The regulations define the eligibility criteria, protected debts, creditor obligations, and processes for reviews and challenges.