Breathing Space: What It Means and How It Works

What Does Breathing Space Actually Mean?

If debt has reached a point where letters, phone calls, and the threat of enforcement are making it difficult to think clearly, a legal protection called Breathing Space may apply. Formally known as the Debt Respite Scheme, it 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.

In plain terms, Breathing Space means creditors are legally required to stop adding interest and charges to qualifying debts, and must pause most enforcement action, for a set period. The purpose is to give someone in financial difficulty enough time and stability to seek proper debt advice — without the pressure of escalating balances or imminent enforcement.

Breathing Space is not a debt solution in itself. It does not write off debts, freeze them permanently, or prevent creditors from eventually resuming contact. It is a temporary legal pause — a window of time, backed by statute, that creates the conditions for a longer-term arrangement to be put in place.

The Two Types of Breathing Space

According to GOV.UK, there are two distinct versions of the scheme, with different rules governing each one.

Standard Breathing Space

The Standard Breathing Space lasts for 60 days. During those 60 days, creditors covered by the scheme must stop charging interest and fees on qualifying debts, and cannot take enforcement action or contact the debtor directly to pursue repayment. The 60-day period is fixed — it does not extend or reset.

To access a Standard Breathing Space, a person must be referred by a debt adviser who is authorised by the FCA or is working for a local authority. This is an important point: individuals cannot self-refer into the scheme. The debt adviser registers the Breathing Space through an online service administered by the Insolvency Service.

Mental Health Crisis Breathing Space

The Mental Health Crisis Breathing Space is available to people who are receiving mental health crisis treatment. This version lasts for the entire duration of the mental health crisis treatment, plus a further 30 days — meaning it can run significantly longer than the standard version if treatment continues for an extended period.

A Mental Health Crisis Breathing Space must be applied for by an approved mental health professional (AMHP) or, in some cases, a debt adviser working alongside one. The protections it provides are the same as the standard version — frozen interest, paused enforcement — but it cannot be cancelled by the creditor during the protected period in the same ways the standard version can.

Which Debts Are Covered?

Not all debts are automatically included in a Breathing Space. According to the regulations, most personal debts can qualify, including:

• Credit cards and store cards
• Personal loans and overdrafts
• Utility bill arrears (gas, electricity, water)
• Council tax arrears
• Rent arrears (though not mortgage arrears in most cases)
• HMRC debts, including tax credit overpayments
• Benefit overpayments
• Payday loans and hire purchase agreements

Some debts are excluded from the scheme. According to GOV.UK, these include secured debts where the creditor has already obtained a court order for possession, debts incurred through fraud, and certain student loan obligations. A debt adviser will be able to identify which of a person's debts are eligible when registering for the scheme.

What Creditors Must Do During Breathing Space

Once a Breathing Space is registered, creditors who are notified of it have legal obligations they must comply with. These include:

• Stopping the application of interest, fees, and charges on qualifying debts
• Not contacting the debtor to demand payment or pursue the debt
• Not starting new enforcement action (such as applying for a county court judgment, instructing bailiffs, or initiating insolvency proceedings)
• Pausing existing enforcement action that has not yet been completed

Creditors can apply to the Insolvency Service to challenge a Breathing Space if they believe it was registered incorrectly or if circumstances change materially. However, during a valid Breathing Space, the legal protections remain in place.

What Happens During the 60 Days?

Breathing Space is designed to run alongside debt advice, not as a standalone pause. Under the regulations, a person in a Standard Breathing Space is expected to continue engaging with their debt adviser during the 60-day period. The debt adviser has an obligation to review the Breathing Space part-way through and assess whether the person continues to meet the eligibility conditions.

If the person stops engaging with their debt adviser, or if their financial circumstances change significantly (for example, if they acquire assets or income that makes them no longer eligible), the Breathing Space can be cancelled early. If cancelled, creditors can resume adding interest and charges from that point — though they cannot backdate any frozen amounts that accrued during the valid period.

The 60 days is intended to provide enough time to explore the formal debt solutions available in England and Wales — which may include a Debt Management Plan (DMP), an Individual Voluntary Arrangement (IVA), a Debt Relief Order (DRO), or bankruptcy. Each of these has its own eligibility rules, costs, and consequences. A regulated debt adviser can explain how each one applies to a particular set of circumstances.

Obligations on the Person in Breathing Space

While creditors must pause, the person using Breathing Space is not entirely without obligations. According to the regulations, they must not take on significant new debt during the period, and must continue to make payments on debts that are not covered by the scheme (for example, an ongoing mortgage). Failing to meet these conditions can result in the Breathing Space being cancelled.

Who Can Register a Breathing Space?

Only certain professionals can submit a Breathing Space application to the Insolvency Service. For the Standard version, this means an FCA-authorised debt adviser — which includes advisers working at regulated debt advice firms, as well as those working in the free-to-use sector. For the Mental Health Crisis version, an approved mental health professional must be involved.

Free debt advice is available from MoneyHelper, StepChange, Citizens Advice, and National Debtline — all of which can assess eligibility for Breathing Space and, where appropriate, register it on a person's behalf. These organisations provide regulated debt advice at no charge to the person seeking help.

Common Misconceptions About Breathing Space

Because the term has become more widely used since the scheme launched, there are some misconceptions worth clarifying.

It does not stop all contact from creditors

Breathing Space pauses enforcement and debt-chasing contact. However, creditors can still send routine statements, respond to queries initiated by the debtor, or take steps required under existing court orders in limited circumstances. It is not a complete communications blackout.

It does not write off or reduce the debt

The underlying debt does not disappear during or after a Breathing Space. Interest and charges are frozen — not cancelled — for the protected period. Once Breathing Space ends, the full balance (excluding frozen charges) becomes active again unless a longer-term arrangement is in place.

It does not affect credit files in a standardised way

The regulations do not specify a mandatory credit file marker for Breathing Space in the same way that formal insolvency solutions (IVAs, DROs, bankruptcy) carry a public record. However, lenders may record the period of non-payment in their own systems, and missed payments during the period may still be reported. A regulated debt adviser can explain what to expect in practice.

It is not available in Scotland or Northern Ireland

The Debt Respite Scheme applies only to England and Wales. Scotland has its own separate protections under the Debt Arrangement Scheme (DAS), administered by the Accountant in Bankruptcy. Northern Ireland has different rules again. Anyone in Scotland or Northern Ireland looking for similar protections should seek advice specific to those jurisdictions.

After Breathing Space Ends: What Comes Next?

When the 60-day Standard period expires — or when a Mental Health Crisis Breathing Space concludes — the protections end. Creditors can resume charging interest, contacting the debtor, and pursuing enforcement. The clock restarts from where it paused.

For most people who use Breathing Space effectively, the aim is to have a formal debt arrangement in place before the protection period ends. Options in England and Wales include a Debt Management Plan administered by a regulated firm, an IVA (a legally binding agreement with creditors), a Debt Relief Order (for those with low income and limited assets), or, as a last resort, bankruptcy. Each path has different implications for credit history, assets, and monthly outgoings — and each requires a formal assessment by a regulated adviser.

If no arrangement is in place when Breathing Space ends, the individual's situation returns to where it was — but having engaged with a debt adviser during the 60 days may have made the path forward clearer, even if more time is needed to put a solution in place.