Breathing Space Explained: What It Means for Debts

What Does Breathing Space Actually Mean?

If debt repayments have become unmanageable and creditors are adding pressure — through calls, letters, or threatened legal action — Breathing Space is a legal scheme that can pause most of that activity while a person seeks formal debt advice. It is not a debt solution in itself, but rather a temporary period of legal protection designed to give someone the time and mental space to assess their options without the situation worsening.

Breathing Space was introduced in England and Wales in May 2021 under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. According to GOV.UK, the scheme creates a legal right to a pause from most creditor enforcement action and stops most interest and penalty charges from building up during that protected period.

There are two types of Breathing Space: a Standard Breathing Space and a Mental Health Crisis Breathing Space. Both share the same core protections but differ significantly in how long they last and how they are accessed.

The Two Types of Breathing Space

Standard Breathing Space

A Standard Breathing Space lasts for 60 days. During this period, eligible creditors must stop most enforcement action, cannot add most interest or charges to qualifying debts, and cannot contact the person directly about those debts. The 60-day period can only be used once in any 12-month window — it is not a repeating protection.

To enter a Standard Breathing Space, a person must be in problem debt and must contact a regulated debt adviser — either from the free sector (such as StepChange, Citizens Advice, MoneyHelper, or National Debtline) or from an FCA-regulated debt advice firm. The adviser registers the Breathing Space with the Insolvency Service, which maintains a record on the Individual Insolvency Register. From the moment it is registered, the legal protections come into force.

Mental Health Crisis Breathing Space

A Mental Health Crisis Breathing Space lasts for as long as the person remains in a Mental Health Crisis Treatment — plus an additional 30 days after that treatment ends. This means there is no fixed upper limit in the same way as the standard version: protection continues throughout the treatment period, however long that takes.

This type of Breathing Space can only be applied for by an Approved Mental Health Professional (AMHP) on behalf of the person — the individual cannot apply themselves. It carries the same creditor protections as the standard version, and according to GOV.UK, it cannot be cancelled simply because a creditor objects.

What Protections Does Breathing Space Provide?

Once a Breathing Space is registered, the protections that come into force are substantial. According to the Regulations, creditors with qualifying debts must pause the following actions during the protection period:

• Starting or continuing court action to recover the debt
• Applying for or enforcing a charging order, attachment of earnings, or third-party debt order
• Taking enforcement action through bailiffs or enforcement agents
• Contacting the person directly about the debt
• Adding most interest, fees, penalties, or charges to the debt

This means that a debt which was growing due to compounding interest or late fees will, in most cases, be frozen at the level it stands when Breathing Space begins. This can be particularly significant where credit card or personal loan balances have been increasing despite regular payments.

It is important to note that Breathing Space does not write off debt or change the underlying obligation to repay. It is a temporary pause — not a resolution. The expectation is that during the protection period, the person will work with their debt adviser to identify a longer-term solution, whether that is a Debt Management Plan (DMP), an Individual Voluntary Arrangement (IVA), a Debt Relief Order (DRO), or another formal route.

Which Debts Are Covered?

Most personal debts qualify for Breathing Space protection. According to GOV.UK, qualifying debts include:

• Credit cards and store cards
• Personal loans and overdrafts
• Payday loans
• Utility bill arrears (gas, electricity, water)
• Council tax arrears
• Rent arrears
• HMRC debts including income tax and VAT
• Benefit overpayments

However, some debts are excluded from the scheme's protections. These include secured debts such as mortgages (though mortgage arrears may qualify), debts incurred through fraud, court fines, and certain student loan obligations. A regulated debt adviser will be able to confirm which of a person's specific debts qualify at the point of application.

Who Is Eligible for Breathing Space?

To be eligible for a Standard Breathing Space, according to GOV.UK, a person must:

• Be an individual (not a business)
• Live in England or Wales
• Have qualifying problem debt
• Not currently be subject to a Debt Relief Order, IVA, bankruptcy petition, or another active Breathing Space
• Have received or be in the process of receiving debt advice from a regulated adviser

There is no minimum or maximum debt level specified — the scheme is available to people with relatively modest arrears as well as those with larger outstanding balances. The key requirement is engagement with a regulated debt advice provider, who will assess whether Breathing Space is appropriate given the individual's circumstances.

It is also worth noting that the Standard Breathing Space is available only once every 12 months. A regulated debt adviser cannot register successive Standard Breathing Spaces back-to-back for the same person. This is partly why the scheme is designed as a bridge to a more permanent solution rather than a recurring pause mechanism.

What Happens During the 60 Days?

Once a Standard Breathing Space is registered, the debt adviser will work with the person to review their full financial picture — income, expenditure, total debts, assets, and personal circumstances. The aim is to identify the most appropriate formal debt solution for their situation before the protection period ends.

During this time, the person has certain obligations too. According to the Regulations, they must:

• Continue to work with their debt adviser
• Not take on new credit (with limited exceptions)
• Provide accurate information to their adviser

If the person fails to comply with these conditions, or if circumstances change significantly, the debt adviser has the power to cancel the Breathing Space before the 60 days expire. Creditors can also request a review if they believe the person does not meet the eligibility criteria, though they cannot cancel it themselves — only the registered adviser or the Insolvency Service can do that.

How Breathing Space Fits Into the Wider Debt Landscape

Breathing Space is one part of a wider set of formal debt options available in England and Wales. It is not itself a solution to problem debt — it is a gateway mechanism that provides a protected window in which a longer-term plan can be established. For many people, the 60-day period will lead into one of the following formal routes:

• Debt Management Plan (DMP): An informal arrangement to repay debts at a reduced rate over time, typically managed by a debt advice organisation.
• Individual Voluntary Arrangement (IVA): A formal insolvency solution binding creditors to a fixed repayment plan, usually over five or six years.
• Debt Relief Order (DRO): A formal write-off route for people with lower levels of debt, minimal assets, and a low income — the debt limit is currently £50,000 following changes introduced in June 2024.
• Bankruptcy: A formal insolvency process that can write off qualifying debts, with specific implications for assets and credit history.

Each of these has different eligibility criteria, costs, and long-term consequences. The role of a regulated debt adviser during Breathing Space is to provide an objective assessment of which route — if any — is appropriate based on the person's circumstances. Breathing Space simply ensures that creditors cannot escalate matters while that assessment takes place.

Where to Access Breathing Space

Breathing Space cannot be self-applied for. It must be registered by a regulated debt adviser — either from the free-advice sector or through an FCA-regulated debt advice firm. Free debt advice is available from:

• MoneyHelper (moneyhelper.org.uk) — backed by the Money and Pensions Service
• StepChange Debt Charity (stepchange.org) — free and confidential debt advice
• Citizens Advice (citizensadvice.org.uk) — local and national support
• National Debtline (nationaldebtline.org) — free telephone and online advice

These organisations can assess eligibility, register a Breathing Space where appropriate, and provide ongoing support throughout the protection period. Anyone uncertain about their options is encouraged to speak to one of these services before the debt situation escalates further.