The breathing space scheme, officially known as the debt respite scheme, is a UK Government initiative that seeks to remove some of the pressure from people who are dealing with problem debt.
In this guide we’ll explain the scheme in more detail, including how breathing space works, who can apply, and how the breathing space scheme might be able to improve your life if you’re battling against debt.
Does breathing space affect your credit?
While breathing space aims to give you more time to deal with debts, it can’t shield your credit from the negative impact of being in default.The debt respite scheme aims to give people with money problems the ‘breathing space’ they need to deal with their debts over time.
Launched by the UK Government in May 2021, the free breathing space scheme will ensure that your creditors will not be able to take legal action against you over unpaid debts. This protection usually lasts for a period of 60 days.
With the pressure of looming legal action being removed, you will have the time you need to make payments towards your debts and to improve your financial situation over time.
The aim of the breathing space scheme is to give eligible people the time and space they need to deal with their debts without fear of creditor pressure.
If you qualify for breathing space, the process works like this:
As long as you’re meeting your side of the arrangement and working with your debt advice provider, you should get protection from creditors for a full 60 days.
The breathing space scheme helps you deal with most personal debts, including both secured and unsecured debts.
Because there are two different versions of the debt respite scheme, the standard breathing space scheme and the mental health breathing space scheme, each has their own distinct qualification criteria.
To be eligible for the standard breathing space scheme, you must meet the following criteria:
Applications to the standard breathing space scheme must be done through an approved debt adviser, who agrees that you need time to get debt advice and you are likely to enter a debt solution if you’re not accepted to the scheme.
In line with the mental health act, people with debts who are also receiving mental health crisis treatment can apply for the mental health breathing space scheme. You must also meet the following criteria:
It was literally the best decision of my life, and it has actually changed my life, cheesy as that sounds, it has changed my life.
Paige , IVA Customer
The breathing space scheme helps you deal with most personal debts, including both secured and unsecured debts.
Qualifying debt for the breathing space scheme includes:
Breathing space will also help you deal with Government debts like tax and benefits arrears, as well as unpaid council tax bills.
Both versions of the breathing space scheme are designed to give you the space you need to deal with your debts, and will hopefully have a positive impact on your life.
During standard breathing space, you will have the time you need to seek debt advice and consider various debt solutions as a way to solve your money issues.
You will be in regular contact with a debt adviser throughout your breathing space, and somewhere between day 25 and 35 of the breathing space scheme, an adviser will conduct a review with you to ensure you’re meeting the conditions of the scheme.
As long as you continue to make your debt repayments and cover your essential costs, you will continue to receive protection from creditors for the full 60 days of the scheme.
With the mental health breathing space, the priority is to ensure you work with mental health professionals to get the treatment you need without the added stress of dealing with creditors.
You won’t need to meet the conditions of the standard breathing space scheme, however a mental health professional will need to confirm every 30 days that you’re still receiving active treatments.
Because breathing space isn’t a payment holiday, you will still have to continue to pay your essential bills and make a contribution towards your debts, but will receive creditor protection as long as you’re still receiving treatment.
When breathing space ends, the protections you received from creditors will end too. That means:
The hope is that, by the time your breathing space ends, you will have worked with a debt adviser to find a longer-term debt solution, whether that’s an IVA, a DRO, or another debt management programme.
When you’re struggling to make ends meet, having to deal with creditors pressuring you for money only adds to your stress – especially if you don’t have the money they’re demanding.
At Your Debt Expert, we support people in that situation everyday, offering free initial debt advice as well as long-term debt solutions.
If you’re facing debts you’re struggling to repay, talk to a friendly debt adviser today on 0800 082 8086.
Advice and support is also available at Money Helper.
*A debt write off amount of between 25% and 75% is realistic, however, the debt write off amount for each customer differs depending on their individual financial circumstances and is subject to the approval of their creditors. The example provided has been achieved by 10% of our IVA customers in the last 12 months.
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