Breathing Space Explained: What It Means for Debts

What Breathing Space Actually Means

If debts are becoming unmanageable and creditors are adding interest or threatening enforcement action, there is a legal mechanism designed to create a temporary pause. Known formally as the Debt Respite Scheme, Breathing Space is a statutory protection — not a voluntary agreement — that compels creditors to stop adding charges and halt most collection activity for a fixed period.

The scheme 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. It is not a debt solution itself — it does not write off or restructure what is owed — but it is designed to give someone in financial difficulty a window of time to seek proper debt advice without their situation being made worse by escalating fees.

Understanding what Breathing Space means in practice requires looking at two separate types: the Standard Breathing Space and the Mental Health Crisis Breathing Space. Each has different rules, different durations, and different eligibility conditions.

The Two Types of Breathing Space

Standard Breathing Space

A Standard Breathing Space lasts for 60 days. During this period, creditors covered by the scheme cannot add interest or penalty charges to the qualifying debt, cannot contact the person about the debt for the purpose of collecting it, and cannot take enforcement action such as instructing bailiffs or applying to court. The 60-day period can only be used once in any 12-month period.

To enter a Standard Breathing Space, the person must work with a regulated debt adviser — either from the free sector or an FCA-regulated firm — who registers the moratorium with the Insolvency Service. The adviser is responsible for ensuring the individual is genuinely seeking help with their debts. During the 60 days, the person must engage with the debt advice process. If they do not, the adviser can end the Breathing Space early.

Mental Health Crisis Breathing Space

The Mental Health Crisis Breathing Space is available to people who are currently receiving mental health crisis treatment. According to GOV.UK, this type of Breathing Space lasts for the duration of the crisis treatment plus 30 additional days — meaning it has no fixed end date and can extend significantly beyond 60 days if treatment continues.

A Mental Health Crisis Breathing Space must be registered by an approved mental health professional (AMHP) or someone acting on behalf of the person in crisis. The same creditor protections apply as in the Standard version: no interest, no penalty charges, and no enforcement activity. There is no requirement for the person to engage with debt advice during the mental health protection period.

Which Debts Are Covered?

Not every debt automatically falls within the protection. According to GOV.UK, the following are among the qualifying debts typically covered by a Breathing Space moratorium:

• Credit cards and store cards
• Personal loans and overdrafts
• Utility bill arrears (gas, electricity, water)
• Council tax arrears
• Income tax, National Insurance and VAT arrears
• Rent arrears (though not mortgage capital owed)
• Buy now, pay later debt and hire purchase agreements
• Benefit overpayments

There are also debts that are excluded from the scheme. These include secured debts where the creditor already has a charging order, debts incurred through fraud, child maintenance or Child Support Agency arrears, student loans, and crisis loans. A regulated debt adviser will be able to identify which debts qualify in any given situation.

What Creditors Must and Cannot Do

Once a Breathing Space is active, a creditor who is notified of it must immediately stop adding interest and fees to the qualifying debt. They must also stop any enforcement action that is underway or planned. This includes pausing bailiff activity, freezing court proceedings, and halting contact intended to collect the debt.

However, Breathing Space does not mean the debt disappears or that payments are automatically suspended. If someone can afford to make regular contractual payments during the 60 days, those should continue. The protection is specifically against additional charges being added and enforcement being pursued — not against the underlying obligation to repay.

Who Can Apply — and Who Cannot

To be eligible for a Standard Breathing Space, a person must be an individual (not a business), must owe qualifying debt, must be a resident of England or Wales, and must not currently be subject to an active Insolvency Procedure such as bankruptcy, an Individual Voluntary Arrangement (IVA), or a Debt Relief Order (DRO). According to GOV.UK, someone who has used a Standard Breathing Space in the previous 12 months is not eligible to use it again within that same 12-month window.

It is also worth noting that Breathing Space is not accessible directly — a person cannot register themselves on the scheme. The application must go through a regulated debt adviser (in the free sector) or an FCA-regulated debt advice firm. That adviser assesses eligibility, registers the moratorium with the Insolvency Service, and takes responsibility for notifying creditors.

For the Mental Health Crisis version, the application is made by an approved mental health professional on behalf of the person in crisis. There is no requirement for a debt adviser to be involved at the point of registration, though debt advice should follow when the person is well enough to engage with it.

What Happens During the 60 Days

Once a Standard Breathing Space is registered, the Insolvency Service notifies creditors electronically. Creditors then have a short window — typically 20 days — in which to flag any objections, though the grounds for doing so are narrow and set out in the regulations.

During the moratorium, the person is expected to work with their debt adviser to explore longer-term options. These might include a Debt Management Plan (DMP), a Debt Relief Order (DRO), an IVA, or in some cases, bankruptcy. The Breathing Space is not designed as a permanent solution — it is explicitly a bridge to a formal debt solution or repayment arrangement.

A Standard Breathing Space can be cancelled before 60 days are up if the person stops engaging with debt advice, if they take on new debt that would not be covered, or if they no longer meet eligibility criteria. Creditors can apply to the Insolvency Service to challenge or cancel a moratorium, but only on specified statutory grounds.

After Breathing Space Ends

When the 60-day period concludes, creditors are permitted to resume adding interest and charges at whatever rate applies under the original credit agreement. Any enforcement action that was paused can restart. This is why it is important that the time is used productively — to reach an agreement or enter a formal debt solution before the protection lapses.

If a formal debt solution is entered during the Breathing Space — for example, an IVA is approved or a DRO is granted — then the protections under that solution take over from the moment it begins. The two sets of protection do not overlap, but they can follow one another seamlessly if the process moves quickly enough.

Breathing Space vs Other Debt Protections

It is worth understanding how Breathing Space differs from other forms of temporary protection. A Time Order, for example, is a court-based arrangement that can vary the terms of a regulated credit agreement — it requires a court application and is specific to that agreement. A Debt Management Plan is an informal arrangement negotiated with creditors and does not carry statutory force — creditors can choose not to freeze interest.

Breathing Space, by contrast, is a statutory right that creditors cannot refuse to comply with once properly registered. That makes it meaningfully different from informal requests or goodwill freezes that some creditors offer on a voluntary basis. The legal compulsion is the defining feature of the scheme.

For people in Scotland, a similar but separate scheme called a Statutory Moratorium exists under Scottish insolvency law. The rules, duration, and administration differ from the England and Wales Breathing Space — anyone in Scotland would need to seek advice specifically about Scottish debt options.

Free Debt Advice Before and During Breathing Space

Because Breathing Space can only be accessed through a regulated debt adviser, the starting point for most people is getting in contact with a free advice service. Free debt advice is available from MoneyHelper (moneyhelper.org.uk), StepChange Debt Charity (stepchange.org), Citizens Advice (citizensadvice.org.uk), and National Debtline (nationaldebtline.org). These organisations can assess whether Breathing Space is appropriate, register the moratorium, and support someone through the full debt advice process at no cost.

For those who prefer to speak to an FCA-regulated debt advice firm rather than a free-sector provider, UK Debt Team can refer to regulated specialists on its panel who can discuss options including Breathing Space and longer-term solutions. UK Debt Team is an introducer, not a debt adviser, and does not assess individual cases or make recommendations — any referral connects the person with an FCA-regulated firm who will carry out a full assessment.