For many households in the UK, debt is not a distant problem but a daily struggle. With rising living costs and unexpected expenses, it is all too easy to fall behind on bills or loans. To prevent financial pressures from escalating into crisis, in 2021, the British Government introduced the Debt Respite Scheme, more widely known as the Breathing Space Scheme.
This scheme offers people the chance to pause and seek help without the threat of enforcement or spiralling charges. It is a practical and humane response to the realities of debt, and for some, it is the intervention that stops financial problems from becoming unmanageable.
Summary
This article covers:
- The UK Breathing Space Scheme provides temporary protection from creditor action for people in financial difficulty.
- There are two versions: a standard 60-day scheme and a mental health crisis scheme with longer protections.
- Applications must go through an FCA-authorised debt adviser.
- Protections include frozen interest and paused enforcement, but ongoing payments like rent must still be met.
- The debt relief FCA scheme is a safeguard but comes with eligibility rules and limitations.
What is the Breathing Space Scheme UK?
Launched in May 2021, the Breathing Space Scheme UK is designed to give people in debt-related trouble temporary protection while they seek professional advice. The idea is not to erase debt, but to create space for people to get help without the immediate pressure of creditors.
There are two types of breathing space. The standard version lasts up to 60 days and is open to most people who qualify. A second version, known as the mental health crisis breathing space, is designed for those undergoing acute mental health treatment. This lasts for the duration of treatment plus a further 30 days, ensuring vulnerable people are not overwhelmed during periods of illness and whilst trying to recover.
The scheme is part of a regulated framework overseen by the Financial Conduct Authority (FCA).
Who Qualifies for Breathing Space for Debt?
Not everyone will be eligible, but the scheme is open to people living in England and Wales who have qualifying debts such as credit cards, overdrafts, rent arrears, or utility bills. People cannot already be in a formal insolvency procedure like bankruptcy or an IVA, and once someone has used the scheme, they must wait 12 months before applying again.
There are exceptions. Certain debts are excluded, such as secured mortgage payments (though arrears can be included), criminal fines, child maintenance, and student loans. These exclusions reflect the types of debts the government considers unsuitable for temporary relief.
How Long Does the Debt Respite Scheme Last?
Once approved, the Debt Respite Scheme protects the applicant for up to 60 days. During this period, creditors must freeze interest and charges and pause most enforcement action. They are also limited in the ways they can contact the debtor, reducing the stress of constant reminders and demands.
It is important to stress that this is not a payment holiday. Where possible, people must continue to pay ongoing bills such as rent, mortgage instalments, and council tax. The scheme aims to give people breathing room, not to excuse them from their commitments. In practice, this means that while enforcement pauses, people are encouraged to use the time to work with debt advisers and develop sustainable repayment plans.
Mental Health Crisis Breathing Space
The mental health crisis breathing space recognises the link between financial stress and mental health. If someone is receiving acute mental health care, they can apply for this special version of the scheme. Unlike the standard 60-day limit, protections last for as long as treatment continues and then for a further 30 days afterwards.
Applications must be certified by an Approved Mental Health Professional (AMHP), who confirms that the person is receiving crisis treatment. Once that confirmation is provided, an FCA debt adviser can apply.
How to Apply for Breathing Space UK
The process of applying is straightforward, but you must go through an FCA-authorised debt adviser. The first step is to contact an adviser, which can be done through charities such as Citizens Advice or StepChange. Applicants then need to provide information about their debts, income, and living costs.
Once the adviser has this information, they submit the application through an online system. Protections begin almost immediately, usually the following day. Applicants should expect creditors to be notified and obliged to comply with the scheme’s terms.
What are the Key Benefits and Limitations
The benefits of the scheme are significant. It halts enforcement, freezes interest, and gives people the time they need to address their financial problems. For those in crisis, it can be a life-changing pause.
However, the scheme does not wipe debts, nor does it remove the obligation to pay ongoing bills. It must include all eligible debts, meaning applicants cannot exclude particular creditors. There may also be consequences for credit records, as defaults can still be recorded even during a breathing space.
Other options, such as IVAs, Debt Relief Orders, or bankruptcy, may provide more lasting relief. The debt relief FCA scheme is therefore best seen as a short-term safety net, rather than a permanent solution.
How We Can Help
The breathing space scheme UK is a powerful tool for people overwhelmed by debt. By pausing interest, charges, and enforcement, it gives individuals the time and clarity they need to work with advisers and plan a way forward.
For those in mental health crisis, the protections go further, recognising the need for financial safety while receiving treatment.
While the scheme has limitations and is not a substitute for paying debts, it remains a crucial part of the debt relief FCA scheme. For anyone struggling, the best step is to reach out to an FCA-authorised adviser or an Insolvency Law Solicitor and explore how to apply for the Breathing Space Scheme. With the right support, breathing space can be the first step towards regaining financial control.
If your company is facing insolvency or has become insolvent, we can offer you clear, practical legal advice on your legal rights. Contact us on 0330 173 6983 or send us an email for more information.
FAQ
What happens if I get new debts during breathing space?
New debts are not protected. Creditors can pursue them, so it is important to keep up with payments on fresh liabilities.
Can breathing space be used more than once?
Yes, but not within 12 months of the previous application, unless the applicant is eligible for the mental health crisis scheme.
Can I get breathing space for my debt if I am self-employed?
Yes, self-employed individuals can apply if they have personal debts, although purely business debts may not qualify.
Does breathing space cover tenants in rent arrears?
Yes, rent arrears are eligible, but tenants must still pay ongoing rent during the period.
What happens when breathing space ends?
Protections stop, and creditors can resume action unless another arrangement, such as a repayment plan or insolvency procedure, is in place.
