The Debt Respite Scheme – better known as “the Breathing Space” – went live in May 2021.
A Breathing Space is a 60 day period while you get debt advice and find a suitable debt solution.
During this 60 days, you get legal protection from your creditors for most debts and it stops interest and charges being added.
Sounds good?
For a few people this will be a real help, but often there may be better alternatives. A Breathing Space isn’t a debt solution itself, it is just a short pause while you get a proper debt solution sorted out.
A Mental Health Breathing Space has also been introduced. This works differently and should give longer-term help for people in a mental health crisis.
Contents
How do you get a Breathing Space?
To be eligible for a Breathing Space, you have to:
- live in England or Wales;
- not have had a Breathing Space in the last 12 months.
A Breathing Space is set up by an approved debt adviser. There is no “do it yourself” option.
As the Breathing Space is just a short-term hold, it’s good to go to a debt adviser who can help with your sort of debt problems when it ends. See Good places for debt advice for my suggestions.
The debt adviser has to agree that you need debt advice and that a Breathing Space is a good option for you.
How should the Breathing Space help?
As an overview, the 60 day Breathing Space can help in three ways for the debts that are included in it:
- Interest and charges can’t be added.
- Lenders and debt collectors shouldn’t ask you to make a payment to the debt.
- In most cases, enforcement action (taking you to court, sending bailiffs etc) is halted.
National Debtline has an excellent factsheet on the Breathing Space. That goes into detail on these points, including looking at the details of the protection against enforcement action.
The drawbacks of the Breathing Space
Only 60 days!
The biggest drawback is that it only lasts for 60 days. When debt advisers started calling for a breathing space we wanted 6-12 months.
But creditors objected so it is only 60 days. At the end of that, you are likely to get a LOT of letters and other contacts from the creditors in your Breathing Space.
For many people, 60 days will be too short to find a new job, get benefits applications and appeals resolved, or clear priority debts.
It will even be too short to set up some debt solutions. Debt Relief Orders usually take longer than 60 days. If you need to save up for the high bankruptcy fees, that may take many months.
Not helpful with all debts
A debt adviser can look at all your debts and explain if any can’t be included. For example magistrates’ court fines cannot be included but parking tickets from the local council or private car parks can.
Arrears on secured debts such as a mortgage or car finance can be included, but you still need to keep paying the normal monthly amounts.
Sometimes a debt can be included but it won’t help you much or it may affect someone else:
- if a guarantor loan is included, the lender can still ask the guarantor to pay;
- if you stop payments to a joint loan, the other borrower’s credit record will be harmed;
- money being deducted from Universal Credit to pay the UC Advance, benefit overpayments or energy arrears will continue. This may happen with deductions from other benefits too;
- money being deducted from your wages via an attachment of earnings will continue.
All eligible debts must be listed
You can’t decide to leave some debts out:
- you may not want your landlord told that you have financial problems;
- you may worry your bank could withdraw their overdraft. Or that a catalogue account you are using that is not in arrears may be closed;
- if you haven’t been contacted for a while about some old debts, you may not want them informed of your address;
- some old debts may be close to being “statute barred“. It isn’t clear if a Breathing Space will mean you have “acknowledged” these debts so the six year time clock would be reset.
These disadvantages of telling all your creditors are usually well worth it for a “proper” debt solution that is of long-term use to you.
But for just a short hold on your accounts? Often this will seem premature.
Only one Breathing Space every 12 months
Do you need the protection right now? As you can only have one Breathing Space every 12 months, you don’t want have one now if you don’t really need it yet.
Many people are worried about being taken to court, CCJs or being made bankrupt when this is very unlikely to happen soon. For example it can feel scary not being able to pay a credit card or a loan for the first time, or being sent a Default Notice.
A debt adviser can often reassure you about this and you can then look at what your debt options are.
If you miss payments your credit record is harmed
The Breathing Space protects you from being taken to court or having bailiffs sent round. But it does not protect your credit record unless you keep paying all the debts in full.
So unless you actually need this, it is not an easy option for two months with no consequences.
Possible better options
That was a long list of drawbacks. But the good news is that if a debt adviser says a Breathing Space isn’t right for you, it is usually because you have better options.
If you are up to date with your household bills and credit repayments and can afford them, a Breathing Space is not suitable. You may know you are going to be made redundant next month say, but you do not need immediate protection from your creditors. It’s still a good idea to talk to a debt adviser now about what your options may be, so you can plan ahead. And at some point you could possibly need a Breathing Space, but not yet.
Where there is a better debt solution for you immediately then there is usually no point in delaying this. Kicking the can down the road with a Breathing Space first just prolongs things.
It is normally easy to get a temporary hold put on accounts such as credit cards, unsecured loans and overdrafts. You or your debt adviser just ask the creditor, saying you are taking debt advice and can they accept no payments or a lower amount for a few months. If that is all your need, you do not need a Breathing Space,
If you want interest and charges stopped and you know this will have to be for more than 60 days, a payment arrangement that you set up or a debt management plan may be a good way forward. It is better to do this straight away and not delay with a Breathing Space.
The Mental Health Breathing Space
If you are having treatment for a mental health crisis, you can get longer-term help through the Mental Health Breathing Space scheme.
The Mental Health Breathing Space provides the same protections as the “standard” Breathing Space but it is a lot more flexible. It lasts for the duration of the crisis treatment plus 30 days and you are not limited to one a year.
You don’t need to take debt advice during a Mental Health Breathing Space – when it ends many people will need debt advice and at that point a standard Breathing Space may be appropriate.
To be eligible for a Mental Health Breathing Space, an Approved Mental Health Professional (AMHP) will need to confirm you are receiving crisis treatment and complete a very short evidence form to say this.
This form can be submitted not just by you – many people in a mental health crisis may not be able to do that – but also by your social worker, a mental health nurse, your care coordinator etc.
See The single point of entry for the Mental Health Crisis Breathing Space for details about this.
If you aren’t sure if you are getting is “crisis treatment” ask your GP or someone involved with the current help you are getting. Some people who are struggling with mental health problems may not qualify as being in “crisis treatment” and will need to talk to a debt adviser about a standard Breathing Space.
Where to get good debt advice
Are you struggling to pay car finance?
Do you qualify for a Debt Relief Order?
Dean Russell says
I think Breathing Space (BS) has some good points around slowing down any rent repossessions and can alleviate mental health debtors. However, i also think that it does not solve anything long term, it increases more work on Advisers. It would not surprise me if MAPs would want a BS application made even if client is going down the DRO route for example.
Do you have any further information on We are Debt Advisers, only seen this one Twitter and no web site. Just wondering who they are and what they do
Thanks
Dean Russell
Sara (Debt Camel) says
It’s a loose grouping of debt advisers rather than a formal “sign up to become a member here” organisation. There is a website https://wearedebtadvisers.uk/ and you can sign up to their mailing list https://wearedebtadvisers.uk/mailing-list.
Graham O'Malley says
Hi Sara
There is also this – https://medium.com/adviser/breathing-space-6982b1630a96 – as a resource, which is more in depth!
Graham
MM says
Hi
Anyone know what date the money shop claims be paid? They say ‘estimated by May 21’ but as these things go, knw how goes…
Sara (Debt Camel) says
see https://debtcamel.co.uk/money-shop-to-close-two-million-customers-will-be-informed/ for the latest news, not this page.
Murphy 77 says
Another government scheme that appears not very well thought out. little impact on deductions from UC that cause most of the financial hardship and I’ve yet to come across a creditor who wouldn’t put an account on hold anyway.
Another additional administrative burden on top of everything else from MAPS that ticks boxes without providing a proportionate benefit to the client.
How often do we come across clients where circumstances are likely to improve within 60 days.
I concede that I’m cynical and that there may be situations where this provides a benefit but on the whole, I feel that clients benefited more from the informal way that’s mostly worked for years. Lowell as an example previously showed remarkable forbearance but are now expected to adhere to the requirements of breathing space.
Laura Pierce says
Hi Sara,
It’s now been nearly three months since the Breathing Space came into force yet some creditors are denying all knowledge of its existence. One notable example is Scottish Power. I’ve had a few clients recently who have been entered into Breathing Space and they want to set up payments for ongoing usage (i.e. not including arrears as they are applying for a DRO very shortly). Scottish Power are refusing to do this – responses vary from trying to make the client prove that they have been submitted into the Breathing Space scheme, to denying that this government scheme exists. The client is thereby unable to comply with their obligation to keep up with ongoing liabilities.
Have you heard of anyone else experiencing something similar with this company? Not sure if it is lack of training or company policy to deny all knowledge.
Sara (Debt Camel) says
I haven’t, no. Have you reported this as Social Policy?
You don’t have to cancel a BS if the client cant meet ongoing liabilities if you feel there is a good reason for this. And a DRO should resolve the clients’ problems of course. But time wasting and annoying!
Jenny says
Hi Sara,
I don’t know if you can help but I have searched the internet and cannot find the answer I am looking for, I spoke to my bank yesterday for a loan payment holiday they said they weren’t able to do this but could apply breathing space to my account, I then looked this up and did it through step change, my question is from what I understand it stops the interest I don’t want to have any missed payments so I want to pay my loan payment for this month but usually when I pay they then take a large amount of interest off my payment so for example I pay 300 on my account it shows as 200 interest and 100 paid off the loan, will they will give me back the interest I have paid if I am on breathing space? Hope this makes sense! Thanks :)
Sara (Debt Camel) says
You need to ask the bank what they meant by a “breathing space” as it probably isn’t the same as the formal breathing space that can only be set up by a debt adviser, not a lender.
I then looked this up and did it through step change,
Did you speak to anyone at StepChange about this?
How do you normally make loan payments?
Do you have other debts apart from this loan?
IC says
Hi Sarah,
I have contacted Step Change regarding my financial situation and they advised I contact my creditors to ask for breathing space for 60 days whilst Step Change review my situation further. From looking online and the information provided on debt camel, it appears that a request for breathing space can only be set up by an approved debt adviser. I am slightly confused now that they have asked me to contact my creditors directly. Is it the case I go ahead and make contact and explain that Step Change have advised me of this option?
Many Thanks.
Sara (Debt Camel) says
You phoned StepChange? What number did you call?
IC says
I contacted the number provided on their website: +448001381111 however, due to the long wait time/queuing system I utilised their online chat service. I was advised to draft an email and send to my creditors. Since this advice, I have received this evening from StepChange, an email with a link to complete a budget form with further information and instructions regarding my eligibility to apply for breathing space. So I think they will be supporting with the application after all (it was confusing at the time.)
Many Thanks.
Sara (Debt Camel) says
That’s good. I was worried you had acid contacted a firm who had deliberately chosen a name very close to StepChanges.
Andy says
The information that you found online is correct. You have to apply through a debt adviser who confirms that you have a qualifying debt meet eligibility criteria and conditions.
Creditors can not do this and if stepchange have told you to contact your creditors, you have spoken with someone who is incompetent.
Do you already have a case with stepchange or was this your first contact?
You can contact your creditors and request that they place your account on hold. This would normally be for 30 days but is different to breathing space/government debt respite scheme
https://www.handbook.fca.org.uk/handbook/CONC/7/3.html
John says
Hi Sara.
I lost my job 2months ago but have been keeping upto day with my debt of 25k, spread over 7 credit cards and 3 loans.
I am starting a new job but not until the 1st of July. I was wondering, if I rang my loan and credit card companies up. Could I ask them to put the Breathing Space option in place?
I only say this, as I rang one loan company today and they said my account would go into arrears and my payments would need to go up in the following months to get me back on track. That particular loan is £288 a month over the next 24 months.
Ideally if I could get a freeze on all interest and start making payments at the end of July, this would help massively.
Also, would they put a default on my account for this? I know it would be a missed payment fore sure.
Kind regards
John
Sara (Debt Camel) says
How much of the 25k is credit card debt?
Are you buying or renting?
Do you also have car finance debt?
John says
Hi Sara
Living with a friend at the moment at his house and is fine with me not paying towards the bills for 2 months until I get sorted. I own the car but it’s jot worth much.
13k over 3 loans and 12 in credit cards.
As I say, I’ll be back at work in July. I’ll be getting paid just over 2k from the end of July.
Hoping to have this all cleared in 24-30 months.
I am conderising a DMP as I’m only left with £70 a month to myself after all bills. but not sure. What would you advise?
Sara (Debt Camel) says
You will only have 70 left after bills when you are Back in work?
John says
Hi Sara
Yes, £70 a month.
I will be making some bonus at work, maybe £600 average. I think with the interest on everything (loans and credit cards) i’ll end up paying around 40k off in total.
I really don’t want to do into a DMP as that will get me defaults on my credit file for 6 years. I would like to apply for a mortage in the next 4 years. But everything seems like such a huge amount.
I’m literally making 11 different payments to 11 individual companies
Sara (Debt Camel) says
You have no chance of being able to save up a mortgage deposit with those huge debts. A mortgage at the moment is just a fantasy and you shouldn’t let it stop you taking a sensible decision on your debts.
You have no income at the moment and it is reasonable to ask your creditors to accept no payments until you are back in a job. That will show on your credit record as missed payments.
If a formal breathing space is set up, that protects you from being taken to court or having bailiffs sent round. But your credit record will still have missed payments recorded unless you keep paying all the debts in full.
I suggest that as you will have little spare money to overpay the large debts even when you are back in work, a DMP with StepCHange would be appropriate now and also when you are back in work. See https://www.stepchange.org/how-we-help/debt-management-plan.aspx. Do NOT set up a DMP with any firm that charges fees – they prolong the time you are in the DMP and the DMP itself is exactly the same as with StepChange.
John says
Hi Sara
Thank you for that info, it’s very helpful.
So the mortage side of things, it’s a funny one. My friend has a few houses that he owns out right. He rents them out. He saidbi could just pay him £700 PM for 20 years and then i will own the home. The house is worth 140k. Of course we will get some stuff in writing from a lawyer to confirm all this.
I was thinking about the breathing space just to get me through the next 2months.
If I went for this, I am aware they will put missed payments on my credit file. But would they default it?
I’m in 2 minds whether to just go into a DMP. As the debt stands at 27.5k. Which with no interest added, I could have paid off in 24months (£1,146 per month for 24 months) this would leave me money for going out, possible savings etc. But of course, I’ll default on 8 credit cards and 3 loans. I’ll never get credit again as I have already got 4 defaults from credit cards from back in 2019.
Or if I get the 2 months breathing space until I start earning money again and pay everything off. That will be a total paid off around 39k (including interest) but as mentioned.. . I’ll be living off £70 a month for the next 2 years
Would you advise a DMP over everything else?
John
Sara (Debt Camel) says
You definitely need legal advice on that “offer” from your friend. Is it set up as a mortgage so you buy the house at the start? If it isn’t, what are your rights if he dies, marries, gets divorced, changes his mind, it burns down… or if you want to move somewhere else’s after 15 years…
But if it will work out, you don’t care what happens to your credit record, do you?
If you can pay everything including interest in a few years that is great. But your £70 a month left sounds way too tight with a growing family. How much is in your budget for clothes for the kids? Days out?
Why not talk to StepChange and see what they suggest?