Money advice: benefits, debt and budgeting

Formally referred to as the ‘Debt Respite Scheme’, new regulations came into effect on 4 May 2021 to help people in problem debt manage their finances more effectively by reducing the pressure caused by debt for a short period of time. There are two types of Breathing Space: a standard space and a mental health crisis space.

The Breathing Space scheme provides protection to people in problem due to debt, by pausing enforcement action and freezing charges, interest and fees for qualifying debts. The standard freeze lasts up to 60 days. A mental health crisis freeze provides further protection, lasting as long as a person's mental health crisis treatment, plus 30 days.

Breathing Space is not a debt relief scheme. The debt remains outstanding, it just cannot be enforced during the Breathing Space period.

How do I know if I am eligible?

To be eligible, you need to be an individual who:

• Is a resident, or normally lives in England or Wales
• Is not undischarged bankrupt
• Does not have a current debt relief order, individual voluntary arrangement or an interim order
• Has not already been entered into a Breathing Space
• Has a qualifying debt where they cannot meet payments

To enter a mental health crisis Breathing Space, you must meet the above requirements, plus be receiving mental health crisis treatment.

What are qualifying debts?

The debts that qualify for a Breathing Space are:

• Outstanding Council tax 
• Benefit overpayments
• Parking fines
• Penalty charges
• Overdue rent
• Any other debt, either in a sole or joint name

Debts that are excluded are:

• Repayment of advances of Universal Credit, PIP, JSA or ESA
• Ongoing Council Tax and Business Rates payments
• Ongoing taxes, duties or National Insurance contributions
• Ongoing rent, insurance or mortgage payments
• Ongoing utility charges (e.g. gas or electric charges)
• VAT owed from running a business
• Debts or liabilities owed due to fraud
• Child maintenance orders

How do I start a Breathing Space?

To enter into a Breathing Space, you need to contact a Debt Advisor. Citizen's Advice Waltham Forest can provide this service and is accessed by either phone on 0808 278 7838 or via webchat.

A Debt Advisor cannot charge you for providing advice or entering you into a Breathing Space.

What happens next?

Once the Debt Advisor has confirmed that you are eligible, they will enter your details onto the Breathing Space Register. This will send out a notification to all creditors to who you owe a debt. They will not be able to contact you to request payment of the debt(s) or undertake enforcement action against you.

If you are in a standard Breathing Space, your Debt Advisor will contact you for a mid-way review. This is to ensure the Breathing Space is still appropriate for you and that you are still paying your ongoing liabilities.

Once the Breathing Space ends, creditors can start to:

• Apply interest charges again
• Start enforcement action
• Continue with legal proceedings