the debt respite scheme (breathing space)

what is breathing space?

the breathing space scheme was introduced by the debt respite scheme (breathing space moratorium and mental health crisis moratorium) (england and wales) regulations 2020 (the regulations). it gives individuals due to make debt repayments (ie debtors) a breathing space (ie a pause) of 60 days to find a solution to their debt issues and seek professional debt advice. 

during the 60-day breathing space moratorium, debtors will not face most enforcement actions. most interest charges, fees, and other charges (eg penalties) on their debts will also be frozen. further, creditors cannot contact a debtor about any debts covered by their breathing space.

individuals can apply for 2 types of breathing space:

• standard breathing space – available to anyone struggling to repay their debt

• mental health crisis breathing space – available to anyone struggling to repay their debt who is receiving treatment for mental health issues 

the mental health crisis breathing space offers stronger protections than the standard breathing space. it lasts for as long as the person’s mental health crisis treatment plus an additional 30 days (regardless of how long the crisis treatment lasts).

who is eligible for a breathing space?

to be eligible for a standard breathing space you must:

• be an individual 

• owe a qualifying debt (more on this below)

• live in england or wales

• not be bankrupt, have a debt relief order, or an individual voluntary arrangement at the time of application, and 

• not have already had a breathing space in the last 12 months 

to be eligible for a mental health crisis breathing space you must:

• meet all the criteria set out above for a standard breathing space, and

• be receiving mental health treatment. this includes if you:

  • have been sectioned under the mental health act 1983 (ie detained and treated without your agreement)

  • have been removed to a space of safety under the mental health act 

  • are receiving emergency, crisis or acute care from a specialist service for a mental disorder of a serious nature, and

• have an approved mental health professional (amhp) (eg a social worker, a psychiatric nurse, an occupational therapist or a clinical psychologist) certify that you are receiving such treatment

unlike the standard breathing space, there is no limit to how many times a debtor can enter a mental health crisis breathing space.

what is a ‘qualifying debt’? 

the regulations set out what debts and liabilities fall under the breathing space scheme. a debt is any money owed by a debtor to a creditor. liabilities are any obligations by a debtor to pay a creditor. most debts and liabilities will be qualifying debts. these include but are not limited to:

• credit and store card debts

• mortgages

• personal loans

• payday loans

• overdrafts 

• utility bill arrears

• mortgage arrears

• rent arrears

joint debts (ie debts you took out with someone else and are jointly liable for) can be qualifying debts even if only one person applies for a breathing space. 

certain debts are excluded. these include:

• secured debts (eg mortgages and hire purchases)

• debts incurred by fraud

• child maintenance payments

• student loans

• advance payments of universal credit

• damages for death or personal injury caused to someone else

qualifying debts can include any debts the debtor incurred before the regulations came into effect on 4 may 2021. however, any new debts incurred during a breathing space are not typically considered qualifying debts. 

for more information on qualifying and excluded debts, see the government’s guidance.

how do i get a breathing space?

if you owe a debt and are struggling to repay it, you must first contact a debt adviser to request a breathing space. it will be down to the adviser to determine whether the breathing space will be granted. this will be assessed on an individual basis. the adviser could decide that you are not eligible on a number of grounds, such as if you:

• have assets that could be sold to clear the debt

• have a source of income that could be used to clear the debt 

• are able to enter an alternative debt solution and do not need the protections offered by the scheme 

if you are suffering from mental health issues you can apply for a mental health crisis breathing space. to be eligible, an amhp has to confirm that you are receiving treatment. this confirmation will be used as proof by a debt adviser to grant a breathing space. if you cannot apply on your own, or you are worried about an individual, then the following people can apply on your behalf:

• your carer

• an amhp

• a mental health nurse

• a social worker 

• your representative

• an independent mental health advocate or mental capacity advocate

• a care coordinator

note that it is free to apply for a breathing space. some debt advisers may, however, charge you a fee. you can seek a debt adviser via the citizens’ advice bureau (cab).

for more information, see the government’s guidance. 

when does a breathing space end?

a standard breathing space ends in any of the following instances:

• 60 days after it started

• when it is cancelled by a debt adviser or the courts, or

• if the debtor dies during the breathing space, in which case the breathing space ends the day after the debtor’s death

a mental health crisis breathing space ends 30 days after either:

• the debtor’s mental health crisis treatment ends, or

• the date on which a debt adviser who has asked for confirmation about a debtor’s ongoing mental health crisis treatment has not received a response 

what happens after a breathing space ends?

a creditor will be notified when a breathing space ends. they will be told the day on which the breathing space ended and, if the breathing space ends early, the reason for the cancellation.

once a breathing space ends, creditors can:

• charge interest, fees or other charges on the debt from the breathing space end date

• take enforcement actions (eg contacting the debtor and collecting payments from benefits the debtor is receiving)

• start or continue legal proceedings relating to the debt

interest, fees and other charges that accrued (or would have accrued) during the breathing space cannot be backdated, unless a court allows this. 

note that creditors cannot take these actions if:

• the debtor has gone into a debt solution (eg bankruptcy)

• the debtor has a formal arrangement to deal with their debts with the creditor (eg an individual voluntary arrangement)

after a breathing space ends, and before taking any debt recovery action, creditors should check the individual insolvency register to see if the debtor is in a formal insolvency solution.

creditors may also wish to consider:

• creating a debt recovery letter, a second debt recovery letter, a letter accepting payment in instalments or a letter before action to recover money owed

• pursuing alternatives to legal action before issuing formal court proceedings

• following the correct processes (you can use our debt recovery checklist to help)

for more information, see the government’s guidance for creditors. for more information on recovering debt in general, read our guides on avoiding problems with debtors, recovering debt, and court orders and enforcement. 

depending on their circumstances, after a breathing space ends, debtors can consider: 

• making a letter proposing payments in instalments, proposing a new repayment plan

• setting up an administration order if they have a county court judgment or high court judgment against debts under £5,000, making a monthly payment which the court divides between all creditors

• applying for an individual voluntary arrangement to repay their debts

• applying for a debt relief order, in limited circumstances, to stop making payments to creditors

• applying for bankruptcy, if they cannot pay their rent

what does the debt respite scheme mean for landlords?

if a tenant is in rent arrears they can also apply for a breathing space. if this is granted and you are a landlord, you are banned from: 

• serving a section 8 eviction notice

• seeking repayment or seeking a possession order for the property while the breathing space is in place

• contacting your tenant to seek payment of the rent arrears

however, landlords can continue to contact their tenants about topics unrelated to the debt (eg to carry out maintenance or repairs) and can respond to tenants that reach out to them directly to discuss their debt.

landlords will need to make sure that systems and operations are put in place to ensure that no actions are taken against tenants covered by a breathing space grace period. similarly, they need to make sure that no interest charges or other charges accrue on debts during this period.

once their breathing space ends, a tenant will need to repay the rent they owe to their landlord in addition to any interest, fees, penalties or charges due on the rent. such interest, fees, penalties or charges can be applied to the debt from the day the breathing space ends. they can only be backdated and applied to the debt during the breathing space if a court allows it.

as soon as the breathing space ends, the landlord can resume recovery actions such as seeking a repayment or possession order for the property or serving an eviction notice to their tenant. landlords may wish to create a rent demand letter, a final rent demand letter or a section 8 notice. landlords may also wish to create a rent repayment plan if a tenant has asked for a rent holiday/delay in their repayments.

for more information, and to ensure you are dealing with tenant evictions legally, read repossessing property - section 21 notices and repossessing property - section 8 notices.

if you need more advice about the debt respite scheme you can ask a lawyer.