Debt Respite Scheme (Breathing Space) guidance for creditors

Question 1

1. Your responsibilities

Accepted Answer

1.1 Creditors

As a creditor, if you’re told that a debt owed to you is in a breathing space, you must stop all action related to that debt and apply the protections. These protections must stay in place until the breathing space ends.

The electronic service will send you a notification to tell you about each debt owed to you in a breathing space and the date the breathing space started. You need to make sure you apply the protections to these debts from the date set out in the notification.

If you’re a creditor, it’s also possible your debt might be added to a breathing space at a later date, because it is only identified after the breathing space has started. In this case, you have to apply the protections from the date you get the notification, or when the regulations consider you to have received it, whichever is the earliest.

For electronic notifications this is the date they are sent. For postal notifications this is 4 working days after it was posted.

If you have any questions about a breathing space you’ve had a notification for, you should contact the debt advice provider whose details are in the notification.

1.2 Debt advice providers

A breathing space can only be started by:

a debt advice provider who is authorised by the Financial Conduct Authority (FCA) to offer debt counselling
a local authority (where they provide debt advice to residents)

Debt advice providers (referred to in this guidance as debt advisers) are responsible for the administration of a breathing space. They are the point of contact for the debtor, their creditors (and appointed agents), and the Insolvency Service (who own and maintain the electronic service).

1.3 The Insolvency Service

We maintain the electronic service that debt advisers use to start the breathing space process, and we send notifications to creditors during it. We also maintain a private register of:

details of people whose debts are in a breathing space
the date a breathing space ended or was cancelled in the last 15 months

We cannot help with individual case enquiries.

Question 2

2. Starting a breathing space

Accepted Answer

2.1 Applying for a standard breathing space

Debtors can only access a breathing space by seeking debt advice from a debt adviser.

Anyone who cannot or is unlikely to be able to repay their debts can apply to a debt adviser for a standard breathing space.

Although all applications must be considered, the debt adviser might decide a breathing space is not appropriate for a debtor.

For example, if a person can access funds or income, they might be able to pay their debts with some budgeting help. Another example would be if they already have assets that could easily be sold to clear the debt. In these cases, a breathing space would not be the right solution. A breathing space might also not be appropriate for a someone who can enter a more suitable debt solution straight away, without needing the protections.

2.2 Applying for a mental health crisis breathing space

The government committed to develop an alternative route to access the protections for people receiving mental health crisis treatment, so that they do not have to access debt advice first. If an Approved Mental Health Professional (AMHP) certifies that a person is receiving mental health crisis treatment, the AMHP’s evidence can be used by a debt adviser to start a mental health crisis breathing space.

In addition to the debtor, the following people can apply to a debt adviser on behalf of a debtor for a mental health crisis breathing space:

any debtor receiving mental health crisis treatment
the debtor’s carer
Approved Mental Health Professionals
care co-ordinators appointed for the debtor
mental health nurses
social workers
independent mental health advocates or mental capacity advocates appointed for the debtor
a debtor’s representative

2.3 Debtor eligibility for a standard breathing space

Before a debt adviser can start the breathing space, they must confirm their client is eligible and meets all the conditions. These are that the debtor must:

be an individual
owe a qualifying debt to a creditor
live or usually reside in England or Wales (a debt adviser must not start a breathing space for a client who lives or usually resides anywhere else)
not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time they apply
not already have a breathing space or have had a standard breathing space in the last 12 months at the time they apply

The debt adviser must also be satisfied that their client meets both of the following conditions:

their client cannot, or is unlikely to be able to, repay all or some of their debt
a breathing space is appropriate for their client

2.4 Debtor eligibility for a mental health crisis breathing space

The debtor must still meet the same criteria and conditions for a standard breathing space, but they must also be receiving mental health crisis treatment at the time that an application is made. A debtor who has had a standard or mental health crisis breathing space in the last 12 months may be eligible for a mental health crisis breathing space.

There is no limit to how many times a debtor can enter a mental health crisis breathing space.

2.5 Information the debt adviser needs

To apply, a debtor must provide their debt adviser with their:

full name
date of birth
usual residential address (in some very limited circumstances, this address might be withheld from the breathing space register and any notification to creditors)
details of the debts that they owe, including the type of debt they owe
the name and contact details for the creditor

if relevant and known, the name and contact details for any agent appointed by the creditor

If the debtor is a sole trader and has business debts to include, they must also provide:

their trading name or names
any business address

Debt advisers will also try to find out and provide extra information that might help you identify the debtor or their debt. This might include:

the debtor’s previous names and addresses, if they’ve recently changed
details of any amounts or references relevant to the debt (such as the debtor’s National Insurance number, if the debt is a government debt, or a credit card number)

However, this information is not required before a debt adviser can start a breathing space.

A debtor must have at least one qualifying debt owed to a creditor, and this must be included in the application. The debtor must tell the debt adviser about all of the debts they know about and give them the contact details they have for each creditor. If they know about a debt collection agent acting on a creditor’s behalf, they might also give the debt adviser those details. This does not change the legal standing of either the agent or the creditor.

2.6 Qualifying debts

Debts or liabilities included in a breathing space must be qualifying debts as defined by the regulations. Debts are any sum of money owed by the debtor to you, while liabilities are any obligation on the debtor to pay money to you. Most debts and liabilities are likely to be qualifying debts. These will include:

credit cards
store cards
personal loans
pay day loans
overdrafts
utility bill arrears
mortgage or rent arrears

Government debts like tax and benefit debts are all likely to qualify, unless they are included in the list of excluded debts.

Joint debts can be included in a breathing space, even if only one person applies for a breathing space. The joint debt would become a breathing space debt, and you must apply the enforcement action protections to the other people who owe that debt to you. You are still able to charge the other people interest or fees, and the breathing space does not affect the other people’s debts and liabilities in their own names.

While guarantor loans can be included in a breathing space, the protections do not extend to the guarantor. The guarantor can apply for their own breathing space, if they’re eligible.

Qualifying debts can include any that the debtor had before the Breathing Space legislation came into force on 4 May 2021.

New debts incurred during a breathing space are not generally qualifying debts. Neither are new arrears on a secured debt that arises during a breathing space. However, if new debt is incurred in the period after the breathing space starts, but before you make your search for additional debts, they may be able to be included in the breathing space.

2.7 Excluded debts

All personal debts and liabilities are qualifying debts, except for:

secured debts (like mortgages, hire purchase or conditional sale agreements). You can only include arrears on these debts that exist at the date of an application for a breathing space. Any new secured debt arrears that happen after the breathing space starts are not protected. If a secured debt is also an ongoing liability and a debtor misses payments, it could mean the debt adviser stops their breathing space
debts incurred from fraud or fraudulent breach of trust. The regulations do not limit this to where a debtor has been charged with fraud or convicted or fraud by a court. You should think of this in the same way you would if a person is bankrupt. Discharge from bankruptcy does not release a person from bankruptcy debts which they incurred by fraud. If you request a review of a breathing space because of fraud or suspected fraud, you might have to provide evidence to the debt adviser or to a court
liabilities to pay fines imposed by a court for an offence. This includes any interest on the fine and any penalties connected to it. This does not include penalty charge notices, like a parking ticket
obligations from a confiscation order
child maintenance or obligations under an order made in family court proceedings
a crisis or budgeting loan from the social fund
student loans
damages they need to pay for death or personal injury caused to someone else
advance payments of Universal Credit
council tax liabilities have not yet fallen due. If all instalments for that financial year have fallen due and have not been paid, these are considered to be a qualifying debt. If a debtor has been served with a ‘reminder notice’ to pay a council tax bill, the remaining liability for the financial year is a qualifying debt

While some business debts also qualify for the breathing space, they do not qualify if the debt only relates to the business (not the debtor personally) and the debtor is VAT registered, or the debtor is a partner in a business with someone else.

An eligible non-domestic rates debt (or business rates) is a qualifying debt if all instalments for that financial year have fallen due and have not been paid. If a debtor has been served with a ‘further notice’, the remaining liability for that financial year is a qualifying debt.

2.8 Request to not disclose debtor’s address

When applying for a breathing space, a debtor or their representative can ask their debt adviser to withhold their usual residential address from you.

The address can be withheld if it is reasonably expected that showing the address would lead to violence against them or someone who normally lives with them. If the debt adviser decides that the debtor’s address should be withheld, it will not appear in any notifications sent to you and will not be on the register maintained by the Insolvency Service.

2.9 When a breathing space starts

A breathing space will start the day after the debtor’s details are put onto the breathing space register.

If you receive electronic notifications about the start of a breathing space, you should receive a notification the same day that details are put on the register. It’s likely this will be the day before the breathing space starts. If you receive notifications by post, it’s likely you’ll receive it after the breathing space has started.

Once a debtor’s details have been put onto the register, you’ll receive a notification, telling you the breathing space start date and details of your qualifying debt (if the debt adviser had those details). If the debt adviser is aware that you are owed more than one qualifying debt, you will receive a notification for each debt. ‘Taking action on the notification’ has advice on what to do if you are not sure which debt or debts the notifications relate to.

You can receive notifications by:

electronic communication (either a notification directly from the electronic service or an email). We can only send electronic communications to you if you opted in through the electronic service
post
someone leaving a copy of the notification at your address

The regulations consider that you’ve received:

an electronic notification on the day it was sent
a postal notification 4 business days after the notification was posted
a notification left at your address on the day it was left

Question 3

3. What to do during a breathing space

Accepted Answer

3.1 Taking action on the notification

When you receive a notification, you must search your own records to identify the debt owed to you by the debtor. This needs to happen as soon as possible. If you do not apply the protections, any action you take is null and void, and you might be liable for the debtor’s costs.

You must make a ‘reasonable search’. You cannot refuse to search your records or ignore the notification if it only has limited information (for example, it does not include a reference number specific to your organisation). The debt adviser does not have to give you any more information to help you identify the debtor. Some creditors might say they cannot make reasonable searches or identify a debtor without the preferred reference numbers or identifiers (like aliases or previous addresses). These creditors need to consider if they’re able to comply with other legal and regulatory obligations that require searches of customer records.

If you have only received notification about one debt, but you are owed 2 debts (for example, the debtor has an overdraft and credit card debt with you) then you must apply the protections set out below to the debt you have been notified about. In all cases, you should tell the debt adviser about the additional debt. It is the debt adviser who will decide if the additional debt qualifies for the breathing space. You may consider voluntarily applying the protections set out below to these debts before you receive a notification, but you are only required to do so once you have received a notification about them.

You must make sure you stop:

the debtor having to pay certain interest, fees, penalties or charges for that debt during the breathing space
any enforcement or recovery action to recover that debt, by you or any agent you’ve appointed
contacting the debtor to request repayment of that debt, unless you’ve got permission from the court

Interest can still be charged on the principal in secured debt, but not on the arrears.

If it’s not possible to stop interest, fees, penalties or charges accruing on the debt during the breathing space (for example, this could be because of IT system limitations), it can continue to accrue. However, the debtor must not be required to pay charges or interest that accrue in this way either during or after the breathing space.

Nothing in the regulations changes what a customer is contracted to pay. For example, if a payment is due during the breathing space and it includes interest that would have been due normally, creditors are not expected to make complex system changes to recalculate these payment amounts. Instead, creditors can make an adjustment to the overall balance owing on the debtor’s account as soon as they can.

Ideally, communications you send debtors should not show interest, fees or charges that accrue during a breathing space. However, it does not breach the regulations to show them, as long as you do not require the debtor to pay. You must make sure you are not asking the debtor for payment. You might want to tell the debtor how you’ll deal with this accrual during the breathing space. You can contact the debtor with information about how you will deal with their breathing space.

You might be considering taking other actions that affect the debtor or a service that you offer the debtor, because you are concerned whether they can make payments in future. If this is the case, you can only do this where it is consistent with the regulations and any other laws or rules that apply. The government expects that creditors will act in accordance with the intent of the breathing space policy. A breathing space is intended to help to create time and space for a person to get the help they need, without having to worry about their financial situation getting worse. A creditor that chooses to take action during this time might need to consider other legal or regulatory obligations and guidance that may apply to them (for example, as a result of a debtor’s vulnerability).

3.2 If you have sold the debt on

If you receive a notification of a breathing space debt that you have sold to another creditor (an ‘assigned creditor’), you must tell that creditor the breathing space has started and give their contact details to the debt adviser.

If you do not do this as soon as possible, you’re liable for any losses the debtor or the assigned creditor have as a result.

If you’ve told a debt adviser the contact details of the assigned creditor, they must update the details on the electronic service. You will not receive any more notifications about that debtor or the debt, and you will not be able to view any of those details on the electronic service.

If you are the assigned creditor, the original creditor should tell you about the breathing space. From the date the breathing space started, you must stop any interest and fees on the debt from being charged and any enforcement action. You will receive a notification from the electronic service, which will tell you what action to take.

3.3 Debts identified after a breathing space starts

When you receive a notification, you must search your records for details of the debt you’ve been notified about. You must also search for any additional debts owed to you by the debtor. Additional debts are debts owed to you by the debtor that are not included in the notification you received.

You only have to do this search once.

If you find any additional debt, you must tell the debt adviser about it as soon as reasonably possible.

You may use the ‘add debts that should be included’ function to notify that you have found an additional debt. This function should only be used to communicate about additional debts and not about debts you have previously been notified about.

You have to give the debt adviser details of the additional debt so they can identify it, establish whether it qualifies, and enter it in the breathing space. You should not need a letter of authority from the debtor, or ask for the debtor to contact you, for you to provide those details.

What a ‘reasonable search’ is might depend on the nature and complexity of your systems, records and processes or the type of debt or liability owed by the debtor.

After undertaking a reasonable search, if it is not clear which debt the notification is about, you should tell the debt adviser about it as soon as reasonably possible. If possible, you should also tell the debt adviser what extra information or clarification might help you identify the debt.

When the debt adviser is given (or becomes aware of) details of an additional debt, they must decide whether it is a qualifying debt. If the debt adviser decides that it is, they must update the electronic service. The electronic service will send you a notification.

The additional debt does not become a breathing space debt until the debt adviser has updated the electronic service and a notification has been sent to the creditor. You do not need to apply the protections to this debt until you receive the notification or it is considered in the regulations that you have received the notification, whichever is the earliest (the day it was sent if you receive it electronically or 4 days after posting). However, this will not change the original start or end date of the breathing space.

The exception to this is where the debt adviser is told of the additional debt more than 45 days after the breathing space started. In these circumstances, it’s possible the debt adviser might think it’s not appropriate to add the additional debt to the breathing space and can decide not to do so.

If the debt adviser decides not to add the additional debt to the electronic service, you will not receive any notification about the debt from the electronic service. In these cases, you can continue any action to recover the debt.

If you notified the debt adviser about an additional debt but have not had a notification about the start of a breathing space for it, you may consider applying the protections voluntarily, but you are not required to do so.

3.4 Stopping enforcement action

Once a breathing space has started, you or anybody acting on your behalf must not take any enforcement actions against the debtor or anyone who is jointly liable with them for a breathing space debt.

Enforcement action is when you try to:

collect or enforce a breathing space debt, including where this is done by any agent you’ve appointed. This includes the Department for Work and Pensions (DWP) where they are collecting a breathing space debt on your behalf through third party benefit deductions (not including Universal Credit or an ongoing liability payment). It does not include an existing attachment of earnings order made before the start of the breathing space, which may continue
apply to DWP for a new third party deduction to be taken from an individual’s benefit payments
try to enforce a judgment or order issued by a court or tribunal, before or during the breathing space, without the court’s permission
enforce your security over a breathing space debt
obtain a warrant or writ
get or seek a liability order
sell or take control of the debtor’s property or goods. If a bailiff or enforcement agent has taken control of any goods by removing them and securing them elsewhere before a breathing space started, the goods may be sold during the breathing space and the costs of the sale deducted from the proceeds. However, fees accrued during the breathing space for storage of those goods cannot be charged either during the breathing space, or after it ends
start any action or legal proceedings (including bankruptcy petitions) against the debtor
make an application for a default judgment for a claim for money against the debtor
take steps to install a pre-payment meter or use a pre-payment meter already installed for the supply of gas or electricity, to collect payment for a debt in the breathing space, unless the debtor has already provided their consent to do so, before the breathing space starts
take steps to disconnect a debtor’s premises from a supply of gas or electricity, unless they have taken that supply illegally
serve a notice to take possession of a property let to the debtor on the grounds of rent arrears due up to the start of the breathing space; or take possession of a property let to the debtor having served such a notice prior to the start of the breathing space
contact the debtor about the enforcement of a breathing space debt. The only exception to this is where you are required to contact or engage with the debtor under the Consumer Credit Act 1974, or by the FCA Handbook

Firms that report to credit reference agencies if payments are received or not can keep doing this during a breathing space. But there should be no automatic effect on a debtor’s credit file triggered by starting the breathing space, and no automatic flag or code that will stay on the file after the breathing space has finished.

3.5 Appointed agents

If you are notified that a debt has gone into a breathing space, you must tell any agents you’ve appointed or instructed to recover it. You must tell the agent to stop enforcement action.

You must also tell the Department for Work and Pensions (DWP) if they’re making deductions from benefits (not including Universal Credit) in respect of your debt. To do this email DWP at:

breathing.space@dwp.gov.uk for Employment and Support Allowance (ESA), Jobseeker’s Allowance (JSA) and Income Support (IS)
cwf.DundeePensionCentreDeduction@dwp.gov.uk for Pension Credit payments

Existing deductions from Universal Credit are not included in breathing space. You should not tell DWP if they’re making deductions from Universal Credit for your debt. If you do this accidentally, the deductions will stop until you apply to DWP again to start the Universal Credit third party deduction.

If you do not tell your agent to stop enforcement action as soon as possible, you may be liable for any losses the debtor or the agent have as a result.

If the debtor gives the debt adviser contact details for any agent appointed by a creditor when the debtor applies for the breathing space, a notification of the start of the breathing space will also be sent to the agent. If the agent is sent this notification, a creditor is not liable for any of the agent’s losses they could have avoided. Where an agent manages the debt on behalf of a creditor, they should tell the creditor of the breathing space and the protections.

During a breathing space, any agent you have appointed or instructed must not:

take enforcement action regarding the breathing space debt
give notice about collecting or enforcing that debt
visit the debtor’s home or business to take their goods
take any of the debtor’s goods
sell any of the debtor’s goods, unless the agent took them before the breathing space started. If a bailiff or enforcement agent has taken control of any goods by removing them and securing them elsewhere before a breathing space started, the goods may be sold during the breathing space and the costs of the sale deducted from the proceeds. However, fees accrued during the breathing space for storage of those goods cannot be charged either during the breathing space, or after it ends
collect a breathing space debt through existing third party deductions from an individual’s benefit payments (apart from Universal Credit)
seek to collect a breathing space debt by applying to DWP for a new third party deduction to be taken from an individual’s benefit payments

It is possible that the debtor will only give the debt adviser details of an agent, not of the original creditor, and that only the agent managing the debt is notified of the breathing space. If you are an agent that has been appointed to manage debt on behalf of a creditor, and you receive a notification, you will want to inform the creditor of the breathing space as soon as possible.

3.6 Existing legal proceedings

If you had already filed a petition for bankruptcy or started any other action in a court or tribunal relating to a debt that is now in breathing space, you must tell the court or tribunal in writing. You must do this as soon as you receive notification of the breathing space.

3.7 Where a court judgment or order has not yet been issued

Any court that receives notification about a breathing space debt where a bankruptcy petition has started, must stop the bankruptcy proceedings, until the breathing space ends or is cancelled. Other court proceedings about the debt (other than enforcement of court judgments or orders) can continue until the court or tribunal makes an order or judgment.

3.8 Where a court judgment or order has been issued

Unless the court or tribunal gives you permission to continue, the court or tribunal must make sure any action to enforce a court order or judgment about a breathing space debt stops during the breathing space. These might be actions like:

holding a hearing during the breathing space
making or serving an order or warrant, writ of control, writ of execution or judgment summons
instructing an enforcement agent to serve an order, warrant, writ of control, writ, execution or judgment summons

The court or tribunal can still send notices or correspondence to the debtor about an action or proceeding.

Court orders and judgments for a breathing space debt, which were made before the breathing space began, cannot be enforced until the breathing space ends. This is unless the court or tribunal gives permission for these actions to continue.

Existing legal proceedings can continue when the breathing space ends. If a time limit for enforcement or new legal claims related to the debt ran out during the breathing space, this is extended to 8 weeks after it ends.

You can still start or continue any legal action relating to any debt that is not a breathing space debt, during a breathing space.

3.9 Contact between creditors and debtors during a breathing space

Generally, during a breathing space, you (or any agents you have instructed) must not contact a debtor about any collection or enforcement action for a breathing space debt. This includes asking them to pay or starting or continuing any legal action.

During the breathing space, you can contact the debtor’s debt adviser about the debt you are owed, or to discuss a debt solution.

You, or any agent, can only contact the debtor:

about anything not related to the breathing space debt, like ongoing liabilities or an excluded debt
if the debtor asks you to talk about a breathing space debt or a debt solution
to respond to a query or complaint the debtor sent you
about any action or legal proceedings the court or tribunal have allowed
if you or your agent are required to do so under the Consumer Credit Act 1974 or by the FCA Handbook

These restrictions are intended to stop contact that reinforces the message that the debtor owes money to you or that they need to make payment. These communications can be worrying to debtors.

It is not intended to stop communication that might be helpful to the debtor. You might want to contact a debtor at the start of a breathing space to tell them they do not need to worry about normal communications you send them. This might be particularly important if there are debts governed by the Consumer Credit Act 1974, where you’re legally required to send them communications.

You might also need to make contact with the debtor about the debt for reasons other than in relation to enforcement. For example, you can issue communications in order to set up a new debt solution that the debtor has requested.

Any communication you send should be minimal and must be carefully drafted to make sure it could not be read like it is about asking them to pay what they owe.

If you receive calls from customers worried by letters they receive from you during a breathing space, this may mean that you need to consider whether the letters are appropriately worded, and whether they are consistent with the regulations.

3.10 Contact between creditors and debt advisers during breathing space

You and the debt adviser may contact each other during the breathing space on anything about the debtor and your debt. This might include things like:

a breathing space debt
a debt solution for the debtor
telling them about an additional debt
asking for a review
telling them the debtor is not meeting their obligations

You can contact the debt advice provider about errors in the notification (such as a misspelled name or an incorrect debt balance). But these errors are not likely to be relevant to the debtor’s right to a breathing space or to the protections that you have to apply. If you think that any error makes the breathing space not valid, you can ask for a review.

You should not contact the debt advice provider to query a debt being included in a breathing space because it is for a small amount of money, or where a debt has not yet entered your collections or recovery process. The debt advice provider has to include all qualifying debts in the debtor’s application. Organisational policies or procedures are not relevant. If you think that a debt is not a qualifying debt, or that a debtor is not eligible, you can ask for a review.

You will need to consider your own data protection obligations and decide what action you might need to take where you are sharing personal data. The regulations make clear that the duty to disclose information under the breathing space scheme should be taken into account in determining whether doing so would contravene data protection legislation. The Data Protection Act 2018 permits you to disclose personal data to a third party where you are required to do so by law.

3.11 Creditor access to the breathing space register

We will maintain a private register with details of:

the debtor’s full name
the debtor’s date of birth
the debtor’s usual residential address
the trading name or names and any address, if the debtor has carried on business with qualifying debts included in the breathing space
the debtor’s breathing space debts
the date the breathing space started
the date the breathing space ended or was cancelled

If you have received a notification about a breathing space debt, you’re allowed to see any information on the register about that debtor and the breathing space debt they owe to you. You are not able to see any information held about:

any other creditor the debtor has
any other breathing space debt owed to another creditor
the debtor’s usual residential address if it has been withheld

3.12 Receiving payments during a breathing space

A breathing space is not a payment holiday. While you cannot enforce a breathing space debt during a breathing space or charge interest or fees on it, a debtor is still legally required to pay their debts and liabilities. During the Breathing Space, the debtor should continue to pay any debts and liabilities they owe you. You can continue to accept these payments, including those you get from existing direct debits.

If there is a controlled goods agreement in place with an enforcement agent on a qualifying debt and a repayment plan has been agreed between the debtor and the enforcement agent, the debtor should continue to make payments under that agreement as they fall due. Although no enforcement action may be taken during the moratorium period and any time limit within the plan will be extended until 8 weeks after the end of the moratorium period, when that time limit expires, any unpaid instalments may be treated as a breach of the repayment plan.

3.13 Ongoing liabilities during a standard breathing space

Certain debts are considered ‘ongoing liabilities’ during a standard breathing space. The debtor needs to keep paying these if they can. If they don’t, the debt adviser might cancel the standard breathing space.

An ongoing liability is any payment the debtor has to pay during a standard breathing space for:

a mortgage secured against the debtor’s primary residence (this does not include arrears accrued up to the start of the breathing space)
a lease or rental agreement for the debtor’s primary residence (this does not include arrears of rent for the property accrued up to the start of the breathing space)
an insurance agreement
any taxes, duties and national insurance contributions
any local taxes or rates for local authorities
water, sewerage, electricity, gas, heating oil or solid fuel bills

Any other debts or bills (secured or unsecured) that fall due during a standard breathing space are not ongoing liabilities.

3.14 If a debtor does not pay ongoing liabilities during a standard breathing space

Where a debtor does not pay an ongoing liability, the debt adviser might decide to cancel the standard breathing space. The debt adviser will consider whether cancelling it is unfair or unreasonable to the debtor. This can be done as part of the midway review process. This obligation and review process does not apply to debtors during a mental health crisis breathing space.

3.15 Debt adviser midway review during a standard breathing space

During a standard breathing space, a debt adviser must carry out a midway review between day 25 and day 35. This is to make sure they are satisfied the debtor is complying with their obligations.

If the debt adviser thinks the debtor has been meeting their obligations and communicating with them, the standard breathing space will continue until the end date.

If the debt adviser thinks the debtor has not met all of their obligations, they can cancel the standard breathing space in respect of some or all the debts.

If you have asked for a review of a Breathing Space, the debt adviser might combine this with the midway review.

3.16 Cancelling a standard breathing space

Once they have made an application for a standard breathing space, the debtor cannot ask for it to be withdrawn. Once a standard breathing space starts, the debtor cannot ask for it to be cancelled.

Provided they do not consider that the debtor’s personal circumstances would make it unfair or unreasonable, the debt adviser must cancel a standard breathing space for one or more of the related debts after carrying out a midway review if they consider that:

the debtor has not met one or all of their obligations. This includes them not paying their ongoing liabilities (unless the debt adviser considers that the debtor did not have the financial means to do so)
they have put a debt solution in place that applies to all of the debt in the breathing space. A debtor may enter a new debt solution, if they wish to do so, at any point before their breathing space ends. You are not prevented from discussing a debt solution for the debtor with their debt adviser. If does not require you or the debt adviser to wait until the breathing space has ended to discuss and instigate a debtor’s new debt solution
they have not been able to communicate with the debtor about their breathing space. This includes where the debtor is not contactable or is not available
there is an issue with the debtor’s application, or there has been some unfair prejudice to the creditor’s interest, after completing a creditor’s request for a review

If the debt adviser decides it’s necessary to cancel a standard breathing space after a midway review, they should discuss this with the debtor before it’s cancelled, where they can. They must then:

notify the debtor that the breathing space is being cancelled
update the electronic service to tell the Insolvency Service the breathing space has been cancelled

Updating the electronic service automatically updates the breathing space register. The cancellation takes effect on the following day. The electronic service will also send notifications to the creditors telling them the date of the cancellation and the reason the breathing space was ended.

3.17 Cancelling a mental health crisis breathing space

A mental health crisis breathing space does not have a midway review, but the debt adviser will regularly check that the person is still receiving mental health crisis treatment. The mental health crisis breathing space will continue for the duration of this treatment, plus 30 days.

However, the debt adviser must cancel a mental health crisis breathing space if:

they believe the evidence provided to them about the debtor’s mental health crisis treatment contains inaccurate, misleading or fraudulent information, and they do not consider that the debtor’s personal circumstances would make the cancellation unfair or unreasonable
the debtor asks for the mental health crisis breathing space to be cancelled

3.18 Request a breathing space review

You can ask a debt adviser to review the breathing space, or specific debts being included in it, only if you consider that:

the breathing space unfairly prejudices your interests. For example, you think that there has been discriminatory treatment in respect of you, or your debt
the debtor does not meet at least one of the eligibility criteria for a breathing space
any of the debts included in the breathing space do not qualify
the debtor has enough funds to repay their debts

These are the only grounds for requesting a review. Non-payment of ongoing liabilities is not a ground for requesting a review.

You have limited time to request a review, either:

within 20 days of the breathing space starting, based on the start date in the notification you received
within 20 days of an additional debt being added to the breathing space, based on the date when you received or were deemed to have received the notification

You must not ask for a review for any other reason. If none of these grounds apply to your request, the debt adviser does not need to take any further action.

To request a review, you need to give the debt adviser a written statement with the reasons you want a review and provide any supporting evidence you want to provide. This will need to be done outside of the electronic service.

The debt adviser can decide to carry out the review you have requested as part of the breathing space midway review process.

The debt adviser must cancel the breathing space in respect of all or some of the debts if they agree with you unless the debt adviser thinks cancelling the breathing space is unfair or unreasonable due to the debtor’s personal circumstances.

3.19 Breathing space cancelled after creditor review

If a debt adviser decides to cancel a breathing space after a creditor request for a review, they will update the electronic service to tell the Insolvency Service it has been cancelled. You’ll receive a notification that the breathing space has been cancelled, and whether this is for some or all of the debts. After you have received this notification, you can restart enforcement action and charges. You cannot backdate any interest or fees accrued during the breathing space period, unless a court lets you.

3.20 Breathing space not cancelled after creditor review

If the debt adviser decides not to cancel the breathing space, they will tell you about this decision. The breathing space continues, but you can take further action by applying to a court, if you still do not agree.

3.21 Apply to court to cancel a breathing space

After a review, if you do not agree with a debt adviser’s decision, you can apply to a court to cancel the breathing space in respect of some or all of the debts.

If you decide to apply to the court to cancel a breathing space, you should tell the debt adviser. You should make the application based on the same reasons you sent to the debt adviser for your original review.

You need to apply to the court within 50 days of the breathing space starting, or 50 days after being notified about an additional debt being added to it. You cannot do this before the debt adviser has completed their review and has let you know the outcome. You must ask the debt adviser for a case review before applying to the court for a breathing space cancellation.

In applications to court under breathing space regulations 7 and 19, the debt advice provider is not a party to the proceedings but is given notice of the application so that they can provide the appropriate advice to the debtor if asked, and for their information.

The court is not reviewing the debt advice provider’s decision making prior to the application, but making its own decision on the application, based on the information available about the debtor and creditor’s situations. Accordingly, the court does not need the debt advice provider’s involvement in the proceedings to consider these types of application, but should they wish to support the debtor in these applications as an interested party that are notified and can submit evidence or attend court where necessary.

Bearing in mind the potential impacts on debt advice providers, the government does not consider that it would be appropriate to include debt advice providers alongside or instead of debtors as parties to all such applications.

Costs in breathing space proceedings have been left to the judge’s discretion, as is usual practice.

The court will consider your case and tell you, the debtor, and the Insolvency Service of its decision. If the breathing space is cancelled for all of the debts or just some of them, the Insolvency Service will update the breathing space register. You will receive a notification that the breathing space has been cancelled, and whether this is for some of all of the debts.

If a debt owed to you is removed from a breathing space, you must not charge an individual retrospectively for any interest or charges accrued during the breathing space period, unless a court lets you.

3.22 If you do not comply

You must apply all the breathing space protections for a debtor after you’re notified about a breathing space.

If you do not, any action you take is null and void and you may be liable for the debtor’s costs.

The debtor can complain to their debt adviser, who will contact you to remind you of your obligations. The debtor can also complain directly to you, using your complaint procedure. This might include referring their complaint to any external ombudsman, oversight body or regulatory body.

If you still do not meet your obligations, the debt adviser can tell the Insolvency Service and we’ll contact you to remind you of your obligations.

Repeated breaches of the regulations can be considered by your regulator, where appropriate.

Question 4

4. End of a breathing space

Accepted Answer

4.1 When a standard breathing space ends

A standard breathing space ends:

60 days from the date it started
the day after a debt adviser or a court cancels it
if the debtor dies during the breathing space period. In this case, the breathing space ends on the day after the debtor died

4.2 When a mental health crisis breathing space ends

A mental health crisis breathing space will end either 30 days after the debtor’s mental health crisis treatment ended, or 30 days after the date a debt adviser had no response after asking for confirmation from the nominated point of contact about a debtor’s ongoing mental health crisis treatment.

4.3 End of a breathing space notification

When a breathing space ends, you will be sent a notification. It will tell you the date the breathing space ended. If the breathing space was cancelled by the debt adviser or the court, or the debtor has died during the breathing space period, the notification will tell you the reason why it was cancelled.

4.4 Next steps

When a breathing space ends, you can:

start applying interest, fees, penalties and charges to the debt from the date that the breathing space ends. You cannot backdate or apply any interest, fees, penalties or charges that accrued or would have accrued during the Breathing Space period, unless a court allows you to do this
take any action to enforce your debt, including contacting the debtor, or collecting debts from benefits
start or continue any legal proceedings about your debt

You cannot take these actions if the debtor has gone into a debt solution. This could include a debt relief order or bankruptcy.

You also cannot take action if they have made a formal arrangement with their creditors to deal with their debt, such as an individual voluntary arrangement.

You can check the Individual Insolvency Register to see if your debtor is in a formal insolvency solution.

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Applies to England and Wales

Standard breathing space

Mental health crisis breathing space