A breathing space can only be started by debt advice providers (referred to in this guidance as debt advisers) who are authorised by the Financial Conduct Authority (FCA) to offer debt counselling, or a local authority where they provide debt advice to residents.
If you are not sure if you can offer debt advice to a client, you should seek legal advice before going any further.
You cannot charge a client to enter a breathing space.
You’ll be the point of contact between your client, their creditors and appointed agents, and the Insolvency Service (who own and maintain the electronic service). Everyone involved should be able to access your organisation’s contact details.
Clients can only access a breathing space through a debt adviser, and after you have checked that they are eligible and that a breathing space is appropriate for them. You must consider any application for a breathing space, but you might decide it’s not appropriate for your client. A breathing space would not be appropriate if they would be able to pay their debts with some help with their budgeting, or if they already have assets that could easily be sold to clear the debt. It also might not be appropriate for a client who can go into another suitable debt solution immediately, without needing the protections.
There will be times when you will need to make subjective decisions about a client. Like whether a breathing space would benefit a client, or whether cancelling a breathing space would be unfair or unreasonable for a client. There are no defined rules for these sorts of decisions. In these situations, you will use your professional judgement.
You can refer your client to another debt advice provider if necessary.
Once you have started the breathing space process for a client, the electronic service will send a notification to their creditors to tell them that each debt owed to them by your client is in a breathing space and when the breathing space started. The notification will give the creditor information to help the creditor to identify your client and their debt and check for any other debts that your client may owe them. They need to apply the breathing space protections, as well as contact any other agents or third parties who may need to know about it. We have separate guidance for creditors.
We maintain the electronic service used by debt advisers to start the breathing space process and send notifications to creditors and agents. We also maintain a private register of clients whose debts are in a breathing space or who have had a breathing space that ended or was cancelled in the last 15 months. We make sure eligible debt advisers who want to offer a breathing space can use the service. We register new debt advice providers for the electronic service and deal with any technical issues.
The Insolvency Service cannot help you with any individual case enquiries. You should send these queries to the Specialist Debt Advice Service.
If an Approved Mental Health Professional (AMHP) certifies that a client is receiving mental health crisis treatment, you can use the AMHP’s evidence to start a mental health crisis breathing space for the client, if they are eligible for one.
AMHPs are mental health professionals approved by local authorities, who have specific training in mental health and mental capacity law. They support people in crisis and are usually based in community, crisis or home treatment teams.
AMHPs are the only professional group who can provide evidence that a client is receiving mental health crisis treatment.
Other doctors, including GPs, cannot provide this evidence. However, as is the case for mental health assessments, doctors and other professionals and service providers will be able to refer someone to an AMHP for this purpose.
The nominated point of contact is very important in a mental health crisis breathing space. The AMHP’s evidence form will give you details of a nominated point of contact. These details should include an email address and a telephone number.
The nominated point of contact will need to respond if you ask for information, and they need to tell you when the client’s mental health crisis treatment is ending. The nominated point of contact should be someone who has ongoing involvement in the client’s crisis care. This could be a care co-ordinator that’s been appointed under the Care Programme Approach (or in Wales, the Care and Treatment Plan), an AMHP, or a mental health nurse.
You can also contact the nominated point of contact if there is a problem with the evidence form or delay in starting the mental health crisis breathing space.
We offer an electronic service for you to start a breathing space. You can do this either through the GOV.UK service or through an Application Programming Interface (API) if you automate your processes. Before you create an account for a new client, you can search the register to check if your client has had a standard breathing space in the last 12 months. You should check your client is eligible before you start the process.
The electronic service will send notifications about the breathing space to creditors and their agents whose details you provide. It will send these notifications to creditors and any agents by email, API (like a notification directly from our electronic service to theirs), or letters if no other channels are available. It will also update the breathing space register, which we maintain.
This is where we keep information about current and recent breathing spaces. We manage the data held on the register, including a person’s name, date of birth, usual residential address, and the dates a breathing space started and ended. Some users can see the information held on the register. These users are:
- your client, who can ask to see their own details
- your client’s creditors, where they’ve been notified about debts owed to them that are in the breathing space
We’ll delete a client’s information from the register 15 months after their breathing space has ended.
The Insolvency Service will maintain a register of your clients who have gone into any breathing space.
It is a private register, and must contain the following information:
- date of birth
- usual residential address, unless you have approved your client’s application to have this address withheld from creditors
- any previous client names and addresses, if you have given these
- trading name and address, if you have given these
- the date the breathing space starts
- the date the breathing space ended, if it has
Details of your client’s debts will be held on the register. You’ll be able to view all the debt details, but any creditor will only be able to see information about the debts they are owed by your client.
If you discover any mistakes or information missing from the register, then you must update the electronic service.
When you’ve done this, the electronic service will update the register. In cases where the corrected details are about your client’s name, date of birth, usual residential address or trading name and address, the system will send another notification to their creditors.
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.
For this service, we are the data controller and a data processor, so we follow the Information Commissioner’s Office guidance. You need to find out what your own obligations are for this.
We are responsible for collecting, managing and publishing reports about how people use breathing space, in line with guidance from the Office for National Statistics.
Any client who is eligible and is having trouble paying their debts can apply to a debt adviser for a standard breathing space. Their representative (for example, someone with power of attorney) can also apply on their behalf.
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 advice from a debt adviser first. If an 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.
People who can apply to a debt adviser on behalf of someone 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
Before you start a standard breathing space, you must get enough information to understand your client’s financial situation. This is so you can advise them on whether they are suitable for a breathing space, and any consequences of being in one. However, it is not necessary to complete the full debt advice process with your client before you consider a breathing space. You also do not need to complete a full Standard Financial Statement at this stage.
You should remind your client or anyone acting on their behalf that they need to give you accurate information, and they should not withhold any relevant information.
You can give advice about a standard breathing space online, by telephone or face-to-face.
Some debt advisers might use online tools to make recommendations to their clients. Any debt adviser using an online tool must be satisfied that the system they use is capable of establishing that a client is:
- eligible for a breathing space
- that it’s appropriate for them to enter one
- that the debt adviser is meeting their obligations
The level of the advice you need to give at this stage will vary from client to client. You should use your organisation’s processes to decide on what advice to give.
You should tell your client about the impact of a breathing space on their credit file. Firms that report whether payments are received or not will keep doing this during a breathing space. A breathing space cannot repair credit file issues or stop any impact from decisions your client makes during or after it. But there should be no automatic effect on the credit file triggered by starting the breathing space, and there is no automatic flag or code that will stay on the file after the breathing space has finished.
To start a standard breathing space, you need specific information from your client, and should follow your organisation’s processes to verify it. Your client must give you:
- their full name, date of birth and usual residential address. You can authorise this address to be withheld from the breathing space register and any notifications sent to creditors in some very limited circumstances. If your client is currently homeless, you can start a breathing space, but still need to use a usual residential address to initiate it. You should follow your usual policies for where a client does not have a fixed address. It might help creditors identify them if you can give them a client’s previous address
- their trading name or names and any business address, if they’re a sole trader and want to include qualifying business debts in their breathing space
- details of all debts that they owe, and contact details for their creditors and any agents for their creditors, to the best of their knowledge
It might help to tell your client that the more information they give you about themselves and the debts they owe, the easier it is for their creditors to identify their debts and apply the protections for them.
To make the application as full as possible, you might want to:
- carry out a credit reference agency check, if your client consents to it
- include any previous names and addresses, if your client has recently changed these, to help creditors trace their debts
- include any reference numbers, like a card or account number, if the creditor is a bank, or the client’s National Insurance number, if the creditor is a government creditor
A standard breathing space can be started with only one qualifying debt. But your client is not protected from creditor enforcement action until each debt owed to that and any other creditor is added to the standard breathing space and their creditors have received notification about each one. If your client thinks they might have more qualifying debts, you might decide it’s better to wait for the client to give you more details.
Before starting a standard breathing space, you must consider whether:
- your client has funds or income available to them to pay debts as they fall due
- your client would benefit from entering a debt solution, either now or in the immediate future
- your client may be eligible to enter a debt solution during, or as soon as possible after, the standard breathing space ends
- a standard breathing space is necessary for you to assess which debt solution is most appropriate, to advise your client on an appropriate debt solution, or to put a debt solution in place
You can also consider any other relevant information that would help you in deciding whether a standard breathing space is appropriate. For example, you can look at whether the client needs and is able to enter into a debt solution immediately without needing a breathing space. Maybe they already have an appropriate debt solution. This might be something like an agreement with their creditors to repay their debts over a specific period of time.
To start a mental health crisis breathing space, you still need to gather information, but only once you have received an evidence form that has been completed by an Approved Mental Health Professional (AMHP).
You do not have to offer advice to the person receiving mental health crisis treatment or their representative about whether they are suitable for a mental health crisis breathing space. But you can offer advice if it is possible to do so.
You must consider whether a mental health crisis breathing space is appropriate for your client, but there are fewer conditions to meet than in the standard breathing space. You should decide if you think your client has the funds to pay their debt as it falls due. You might not be able to do this in the same way as you would when advising a client directly, as you might not have access to their income or employment information. If a client has enough funds to pay their debts, then it’s not likely a breathing space is appropriate for them. You can also consider anything else you think is relevant to make your decision.
You will need to establish that your client has at least one qualifying debt before you can start a mental health crisis breathing space.
Because the information provided to you in the evidence form might be very limited, you must carry out a credit reference agency (CRA) check with one of the credit reference agencies, using the information about your client provided by the AMHP. This will help you make sure that your client has at least one eligible debt and that you are including as many qualifying debts as possible. It will also evaluate the client’s overall financial position and their past payment history. That credit reference agency search will be a soft search and should not negatively affect the person’s credit rating.
AMHPs need to complete the ‘Breathing Space Evidence of Mental Health Crisis Treatment’ form. They need to certify the person named in the form is in mental health crisis treatment. The form will have the full name, address and date of birth of the client, and contact details for the AMHP and the nominated point of contact. The AMHP, the client, a carer or another representative of the client might send you the form.
When you receive the form, you should make sure you are happy that the form is valid and has the necessary information. If you are not sure, you can check with the AMHP or the nominated point of contact. If you are still not sure, you can contact the local authority that has approved the AMHP to check their status.
The AMHP does not have to give you information about the person’s debts, but if they can, you can use these to help you understand the person’s financial situation. You need to verify that your client has at least one qualifying debt before you can initiate a mental health crisis breathing space on their behalf.
You must start a breathing space if you decide it is appropriate for your client, and they:
- meet the eligibility criteria
- have at least one qualifying debt
- cannot, or are unlikely to be able to, repay all or some of their debt as it falls due
To be eligible for a standard breathing space, your client must:
- be an individual
- owe a qualifying debt to a creditor
- live or usually reside in England or Wales
- 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. You should verify this by checking our Individual Insolvency Register (IIR). Clients who have an interim order will not be on the IIR, so you should check this with them directly
- not already have a breathing space, and not have had a standard breathing space in the last 12 months at the time they apply
To verify whether someone has, or has had a breathing space, you should search the breathing space register to check.
If the breathing space register or the IIR suggest that your client is not eligible for a breathing space, you must check this carefully with your client. Information is held on the breathing space register for 15 months after the breathing space ended or was cancelled. On the IIR, information is held for 3 months from the date someone was discharged from bankruptcy, or the DRO or IVA ended. Your client might be eligible for a breathing space, even if they are on either register.
To be eligible for a mental health crisis breathing space, a client must meet all the criteria for a standard breathing space, except the criteria on whether they have had a breathing space in the last 12 months. There is no limit to the number of times a client can enter a mental health crisis breathing space.
They must also be receiving mental health crisis treatment at the time of the application. We have information on what AMHPs must provide for a mental health crisis breathing space.
Once you’ve decided that your client is eligible for a breathing space, you must decide whether your client’s debts qualify for breathing space protections.
Qualifying debts are the same for standard and mental health crisis breathing spaces.
Most of your client’s debts are likely to be qualifying debts. These include:
- credit cards
- store cards
- personal loans
- pay day loans
- arrears on utility bills
Government debts like tax and benefit debts are all likely to qualify, unless they are included in the list of excluded debts.
Joint debts like arrears on a joint mortgage or rent arrears on joint tenancies can be included in a breathing space, even if only one client goes into the scheme. The joint debt would become a breathing space debt, and the same protections apply to both parties. The breathing space does not affect the other people’s debts and liabilities in their own names.
Guarantor loans can be included in a breathing space, but the protections do not extend to the guarantor. The guarantor can apply for their own breathing space, if they’re eligible.
You should make sure you find out whether any of your client’s debts are jointly held and explain the effects of a breathing space to your client. But you do not have to contact any other parties before you initiate a breathing space.
While some business debts also qualify for a breathing space, they do not qualify if the debt only relates to the business (not your client personally) and your client is VAT registered or your client 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 your client has been served with a ‘further notice’, the remaining liability for that financial year is a qualifying debt.
Debts incurred during a breathing space cannot be included.
If the breathing space includes a ‘statute barred’ qualifying debt (one that is not enforceable under the Limitation Act 1980) when the breathing space starts, creditors cannot take court action to enforce it after the breathing space ends. If a limitation period under that legislation has started, and would end during the breathing space or the 8 weeks after it ends, the time limit is extended by 8 weeks from the date that the breathing space ends. If a limitation period has started but has not yet expired, and will not expire during the breathing space, it is possible that including the qualifying debt in a breathing space could be an acknowledgement that would reset the time period. You should discuss this with your client and help them to decide whether to proceed with their application.
All personal debts and liabilities qualify for breathing space protections, 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 because of fraud. You should think of this in the same way you would when advising a client about bankruptcy. Discharge from bankruptcy does not release a client from any bankruptcy debt which they incurred from fraud. If a creditor requests a review of a breathing space debt because of fraud or suspected fraud, you may wish to ask for evidence
- liabilities to pay fines imposed by a court for an offence. This includes any interest on the fine and any penalties or charges connected to it. This would 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 the death or personal injury caused to someone else
- advance payments of Universal Credit
- council tax liabilities that have not yet fallen due. If all instalments for that financial year have fallen due and have not been paid, these are a qualifying debt. If your client has been served with a ‘reminder notice’ to pay a council tax bill, the remaining liability for the financial year is a qualifying debt
When applying for a breathing space, your client, or the person applying for the breathing space on their behalf, can ask you to withhold their usual residential address.
The client’s address can be withheld if it is reasonably expected that sharing it would lead to violence against them or someone who normally lives with them. You cannot just automatically accept an application to withhold a client’s address, and you can decline an application.
Your should explain that the breathing space register is not published or available publicly. As not including the client’s current address might make it more difficult for creditors to identify the client’s debt and apply the protections. If the client wants to continue, your client must explain why their address should be withheld and provide evidence for this. That evidence might include statements made by the client.
You must consider any request for non-disclosure of a client’s address and decide if it should be withheld before you start a breathing space. You must tell your client or their representative of your decision within 7 days.
If you decide to withhold a client’s address, you can proceed with their application for breathing space on the same day. You must still give their address to the Insolvency Service through the electronic service when you start a breathing space. There’s an option for you to tell us the address must not be released to creditors. The electronic service will automatically update the register and send notifications to creditors without disclosing the address. The address is also not available on the breathing space register.
If you decide not to withhold your client’s address, they can appeal against your decision. They must apply to the county court within 28 days from the date you told your client of your decision. You will need to explain to the court why you didn’t consider it reasonable to expect that sharing your client’s address would lead to violence against them or someone who normally lives with them.
This process affects when the breathing space can start. When someone has asked you to withhold their address, you must not start an application for a breathing space for them until the earliest of the following:
- the day that you decide your client’s address should be withheld
- 28 days from the date of your decision not to withhold the address, with no appeal to the court
- the conclusion of any court appeal about your decision to not withhold the address
Throughout the process, you should give your client as much information as possible. You should make sure you are happy they understand what a standard breathing space is, what the requirements are, and what they are expected to do. If this is the case, you should ask for their agreement to initiate a breathing space on their behalf and explain the next steps.
Although it’s not a requirement, we strongly encourage you to seek consent from your client for electronic communications throughout the standard breathing space. The electronic service will issue electronic notifications if your client has agreed to them and has provided an e-mail address.
You should also tell your client that:
- for any additional debts they find after the start of the standard breathing space, creditors are only bound by the restrictions after they’ve received a notification for it
- you have to carry out a midway review for a standard breathing space, to make sure it’s still appropriate
- you can decide to cancel the standard breathing space, after the midway review if your client has not met their obligations
- creditors can ask for a review of the standard breathing space, which means that you might need to ask your client for further information. A creditor review might mean the breathing space is cancelled if it’s not appropriate anymore
- if a creditor is not happy with the outcome of their request for a review, they can then ask a court to consider it. The court can decide whether the breathing space should be cancelled for all or some of the breathing space debts. They can also ask a court for permission to take enforcement action
- there are some circumstances where creditors can still contact the client
- there are some circumstances where debt enforcement that started before the breathing space started (like a direct earnings attachment) can continue, or restrictions stay in place (like a charging order remains in force) during a breathing space
Before you can start a standard breathing space, you must have given advice to your client about whether or not one is suitable for them, and made sure:
- the client meets the relevant eligibility criteria and conditions
- that at least one of their debts is a qualifying debt
- you’ve told them what to expect, and what could happen if they do not comply with the conditions
Before you start a mental health crisis breathing space, you must:
- be content the evidence form the AMHP has sent you is valid
- have carried out a credit reference agency (CRA) check
- made sure the client meets the relevant eligibility criteria and conditions
- made sure at least one of their debts is a qualifying debt
Once you’ve done this, you can put your client’s details onto the electronic service.
You must make sure you have included the following information about your client:
- your client’s full name
- their date of birth
- their usual residential address
- the trading name of your client’s businesses, if there are any
- the addresses of those businesses, if there are any
For a mental health crisis breathing space, you must also include:
- the name and contact details (including email address) of your client’s nominated point of contact, as provided in the evidence form
For both types of breathing space, you must include the information you have gathered about:
- details of your client’s debts, creating a separate record in the electronic service for each individual debt you are aware of. This will make it easier for you if you need to deal with any creditor requests related to a specific debt later on
- contact details for their creditors
- contact details of any relevant and known agents of the creditor, like enforcement agents. Your client might have this information if some enforcement action has already been taken or if your client has been told their debt has been passed to a debt collection agency
The electronic service will already have lots of creditors’ preferred addresses and method of notification. You can select these but will not be able to override them when you are putting creditor details onto the system. However, this is not an exhaustive list and you should encourage your client to give you as much information as they can about their creditors and their debts.
You should consider if it would be useful for your client to give you any:
- former names
- relevant previous addresses where they might have incurred debts
- other information which might help a creditor to identify their debt. This might include the type of debt, any reference numbers, including a vehicle registration number or their National Insurance number if it is a government debt
This information is not required to start a breathing space, but it will help your client’s creditors to identify their debts. This will help them apply the protections to as many debts as possible.
After you’ve put your client’s details and details of their qualifying debts onto the electronic service, our electronic service will put their details onto the breathing space register, and notifications will be sent to their creditors.
The breathing space starts the day after the date your client’s details are put onto the register. On that day, any qualifying debt put onto the electronic service becomes a breathing space debt.
Where a notification of the start of a breathing space is sent to creditors electronically it will be sent very shortly after the information is put onto the register. But a breathing space does not start until the following day. Where a notification is sent by post, it will be sent using second class mail. It is assumed it has arrived 4 business days later.
The notification to a creditor or agent acting on their behalf will state:
- the client’s name
- the client’s date of birth
- the client’s usual residential address, unless you’ve told us to withhold this
- any trading names and addresses your client uses
- the date the breathing space starts and, the expected end date if it is a standard breathing space
- your organisation’s contact details
- details of the qualifying debts that are owed to them
- any further information your client has provided, like previous names, addresses, type of debt, references or amount owed, in order to help creditors identify them and their debts
If your client chooses it, the electronic service will send them a notification confirming the start date of their breathing space. We would strongly encourage you to seek consent from your client to receive notifications electronically. This can be done by entering an email address for your client onto the electronic service.
For a mental health crisis breathing space, notification of the start of the mental health crisis breathing space will be sent to your client’s nominated point of contact.
Before a client makes an application for a breathing space, you might find it appropriate to refer them to another debt advice provider. For example, you might not have the capacity to deal with the client, or they might request to use a different provider. These referrals can be done in the usual way, according to your organisation’s processes and do not need to be recorded in the breathing space register.
Once you have started a breathing space for your client, it’s still possible to refer them to another debt advice provider, if you think it’s appropriate to do this.
If you do refer a client, you should explain the referral process to the client.
Where you accept a referral of a client, you must update the electronic service with the details by the end of the following business day. The referral will take effect first business day following that. You must also notify your client, their representative or their nominated point of contact.
Notifications that the referral has been accepted will be sent to each creditor. The electronic service will revoke the initial debt adviser’s full access, so they cannot see all of your client’s information. Permissions will be given to the new debt adviser.
Whether you are referring or accepting a referral of a client, you must not charge your client a fee in connection with a breathing space or the referral.
The purpose of a standard breathing space is to give your client time to get debt advice while their creditors cannot take enforcement action. It’s time for them to consider their options to deal with their debts, including considering or putting a debt solution in place.
Depending on how your organisation works, you might have already given them this advice and your client might know what they are expected to do next.
Alternatively, your client might need to communicate with you or your organisation further during a standard breathing space to complete the debt advice process and help them deal with their debts.
You must carry out a midway review for all standard breathing spaces. The midway review must be carried out between days 25 and 35 of the standard breathing space. If this review does not happen, it does not invalidate the standard breathing space or impact your client, as the protections would continue. However, you would be failing to meet a statutory requirement.
You do not have to give advice or conduct a midway review for a mental health crisis breathing space, but you must contact your client’s nominated point of contact regularly to confirm that your client is still receiving mental health crisis treatment.
You should tell your client or the person applying for a breathing space on their behalf that they must:
- provide accurate information and not deliberately withhold information
- tell you if they discover any further creditors or debts after the breathing space has started. For example, a creditor that was forgotten on the original application
During a standard breathing space, the client must:
- tell you if there is any change in their circumstances. This could mean a new job, a new source of income, or a problem that would affect their ability to pay their ongoing liabilities or engage with you
- make any payment due in relation to their ongoing liabilities
- not get any additional credit individually or jointly with another person (including any overdraft facility) that exceeds £500 at any point
- engage with you in a way you consider appropriate
Making payments during a breathing space
A breathing space is not a payment holiday. While creditors cannot enforce a breathing space debt during a breathing space or charge interest or fees on it, your client is still legally required to pay their debts and liabilities. During the breathing space, the client should still continue to pay any debts and liabilities they owe, and creditors can continue to accept these payments. This does not stop you from advising your client on how to manage their repayments in their best interests.
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.
Certain debts are considered ‘ongoing liabilities’ in a standard breathing space. Your client needs to keep paying these if they can. If they don’t you can decide to cancel their standard breathing space.
An ongoing liability is any payment your client has to pay during a standard breathing space for:
- a mortgage secured against your client’s primary residence (this does not include arrears accrued up to the start of the breathing space)
- a lease or rental agreement for your client’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 rates for local authority
- 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.
If your client does not keep paying these ongoing liabilities, you’ll have to decide if the standard breathing space should continue. You can take into account whether cancelling the standard breathing space in these circumstances would be unfair or unreasonable to your client. A creditor can contact your client about, or try to enforce any arrears of payment of, an ongoing liability that the debtor incurs during the standard breathing space. This obligation and review process do not apply to debtors during a mental health crisis breathing space.
During a breathing space, a creditor or their agent cannot contact your client about enforcing a breathing space debt. This includes them demanding payment or starting any legal proceedings against your client for these debts.
However, you can contact your client’s creditors during the breathing space about:
- a breathing space debt
- a debt solution for the client
- additional debts not included in the breathing space
- a request from a creditor for a review
- a client or creditors not meeting their obligations
Generally, a creditor or any of their agents must not contact your client about the enforcement of a breathing space debt, during a breathing space. This includes demanding payment, starting legal proceedings, or continuing some existing legal proceedings.
However, a creditor or their agent can contact your client:
- for reasons not related to a breathing space debt, including ongoing liabilities or non-eligible debts
- if your client asked them to about a breathing space debt or debt solution
- to respond to a query or complaint your client sent
- about any action or legal proceedings that existed before the breathing space started, that a court or tribunal has allowed to continue
- where they or their agent has to under the Consumer Credit Act 1974 or the FCA Handbook. This includes ‘notices of sums in arrears’
As soon as possible after receiving notification of the start of a breathing space, each creditor must search their records to identify the debt owed by the client. What is reasonable in these circumstances may differ from creditor to creditor and might depend on things like the nature and complexity of their systems, records and processes or the type of debt or liability they are owed.
Each creditor must also:
- stop applying interest, fees, penalties or charges for the breathing space debt, for as long as the breathing space runs.
- stop any enforcement action to recover the breathing space debt, including contacting your client about recovery of the debt
- stop action by an agent appointed to collect or recover a breathing space debt
- take steps to identify any additional debts they are owed by your client which were not mentioned in the notification they received
- tell you about additional debts, if they find them
- provide you with the other creditor’s contact details, if the breathing space debt or any additional debts have been assigned to another creditor
- tell the new creditor about the start of the breathing space, where it has been assigned to someone else
Where it’s not possible for creditors to stop charges (for example, they’re automated) interest, fees and charges can continue to accrue and your client might be able to see them in a statement or bill. But the creditor must not insist your client pays these charges either during or after the breathing space.
If you or your client are concerned about this, and the creditor has not made clear how they will deal with this kind of charge during the breathing space, you can contact the creditor to resolve this.
After a breathing space has started you may be told about:
- another debt owed to an existing creditor who has been notified about a breathing space
- an existing creditor identifying a new creditor who has been assigned the debt
- another creditor or debt owed by your client that was not included in the application
If a creditor finds any other debt owed by your client that was not in their breathing space notification, they must tell you about it.
If fewer than 45 days have passed since the breathing space started, you must decide whether any new debts you have been told about are qualifying debts and, if they are, you must add each additional debt to the electronic service by creating a new record. This will ensure that a new notification is sent to the creditor and make it easier for you if you need to deal with any creditor requests related to a specific debt later on. The breathing space protections apply to that debt as soon as the creditor receives the notification or is deemed to have received it. However, this does not change the start or end date of the breathing space.
If 45 or more days have passed since the breathing space started, you can decide not to add the debt to the breathing space, even if it is a qualifying debt. This might be because you think that adding the debt to the breathing space for a short period will not help your client.
If a creditor receives a notification but they have assigned the debt to another creditor, they should tell both you and the assigned creditor as soon as they are able. If the original creditor does not do this, they’re liable for any losses caused to your client or the assigned creditor. If a creditor gives you the details of an assigned creditor, you must amend the creditor details on the electronic service and must not create a record of a new debt on the electronic service. This is to make sure the date the debt went into the breathing space is recorded correctly as the date the breathing space started. This will make sure the creditor who was assigned the debt will be bound by the protections from that start date and receive any notifications.
You might want to check that your client recognises a debt before you include it in a breathing space. If they do not recognise it or think they have paid it, you should look at the usual next steps that you would for any disputed or unproven debt before you include it. For example, you might ask the creditor to provide proof of the debt.
Despite the restrictions on a creditor during a breathing space, they can apply to a court for permission to take specific enforcement action. The court will only grant permission where it thinks:
- it’s reasonable to do this
- that it will not be detrimental to your client
- it does not significantly undermine the protections of the breathing space
If the court makes an order that allows the creditor to take specific enforcement action, they will tell your client when this applies to them.
For your client or anyone who is jointly liable with them, enforcement action that must stop during a breathing space might be where a creditor or their agent:
- takes steps to collect a breathing space debt
- takes steps to enforce a court order or tribunal judgment about a breathing space debt
- enforces security held for a breathing space debt
- gets a warrant or writ
- gets or seeks a liability order
- sells or takes control of your client’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
- starts any action or legal proceedings (including bankruptcy petitions) against your client for a breathing space debt
- applies for a default judgment for a claim for money against your client
- takes steps to install a pre-payment meter to take payments for a breathing space debt
- uses a pre-payment meter already installed to take payments, unless your client had agreed for the meter to be installed before the breathing space started
- takes steps to disconnect your client’s gas or electricity supply, unless they’d illegally taken the supply
- serves a notice to take possession of your client’s property for rent arrears or takes possession of their property for rent arrears if a notice has already been served. Creditors can still serve a notice or take possession on grounds not related to rent arrears during a breathing space
- contacts your client about the enforcement of a breathing space debt
Where a creditor previously appointed an enforcement agent to act on their behalf for a breathing space debt, they must tell their agent about the breathing space and explain what it means.
During a breathing space, an enforcement agent must not:
- give notice to your client about taking control of goods
- visit your client’s home or business to take control of goods
- take control of goods
- sell goods belonging to your client, unless the enforcement 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.
A creditor might have already filed a petition for bankruptcy or started other legal actions for a breathing space debt before the breathing space started. In this case, they must tell the court or tribunal that a breathing space has started.
Any court that receives notification about, or otherwise becomes aware of, a breathing space where a bankruptcy petition in relation to a breathing space debt has been presented, must stay 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. A breathing space also does not prevent a creditor obtaining a judgment where the client makes an admission before or during the breathing space.
A court or tribunal must make sure any action or proceeding to enforce a court order or judgment about a breathing space debt does not progress until the breathing space ends. The exception is where they have allowed a creditor to continue action. During a breathing space, a court must not:
- hold a hearing
- make or serve an order or warrant, writ of control, writ of execution or judgment summons
- instruct an enforcement agent to serve an order, warrant, writ of control, writ, execution or judgment summons
The breathing space does not stop the court or tribunal from sending notices or correspondence to your client about legal actions or proceedings.
You should tell your client that existing legal proceedings might continue after the breathing space ends. You should also tell them that if a time limit for a creditor’s enforcement steps or new legal claims related to a breathing space debt run out during the breathing space, that time limit is extended by another 8 weeks after the breathing space ends.
Creditors must apply all the breathing space protections for your client after they have been notified about a breathing space.
If they do not, any action they take is not valid and they may be liable for your client’s costs.
If a creditor does not comply with the protections of breathing space, and your client tells you about this, you should contact the creditor to remind them of their obligations.
If a creditor continues not complying, you can use the electronic service to notify us. We’ll contact the creditor to remind them of their obligations and ask them to apply the breathing space protections. Tell your client they should not to pay any money the creditor is not entitled to collect under the regulations, such as fees and charges.
You can also support your client to complain directly to the creditor, using their complaints procedure, and if appropriate, refer their complaint to any external ombudsman, oversight body or regulatory body. Repeated breaches of the regulations can be considered by the creditor’s regulator, where appropriate.
Usually, a standard breathing space will automatically end 60 days after it starts. You do not need to take any action. The electronic service will automatically update the breathing space register and send a notification to all creditors and their agents, if there are any. You can cancel the breathing space earlier than 60 days if:
- your client goes into a debt solution before the 60 days is over
- your client does not meet their obligations
- you decide to, after the midway review or after a creditor asks for a review
A mental health crisis breathing space lasts for as long as the client is receiving mental health crisis treatment, and another 30 days after that. You can cancel the breathing space earlier than this if:
- you consider that the evidence form you received included inaccurate, misleading or fraudulent information
- you decide to, after a creditor asks for a review
- your client asks you to
Creditors can ask you to review a breathing space within 20 days from its start, or 20 days from the date of a notification about an additional breathing space debt or a new creditor. You can conduct a creditor review straight away or include it in the standard breathing space midway review process.
Creditors can ask for a review if they think that the breathing space unfairly prejudices their interests or there’s been some material irregularity in the application. This would be something like:
- discriminatory treatment in respect of a creditor, or the debt owed to them
- your client not meeting the relevant eligibility criteria, or a breathing space including a debt that should be excluded
- your client having enough funds to pay their debt when it becomes due
There are three steps to follow to carry out a review requested by a creditor:
- The creditor needs to give you a written statement of grounds for requesting the review. They also need to give you evidence, if they have it, to support that statement. You may want to talk to your client to see if they have any explanation.
- You must consider the request and the evidence provided and decide whether to cancel the creditor’s debt from the breathing space or cancel the whole breathing space. If you think that the creditor has demonstrated unfair prejudice to their interests, or there has been some material irregularity, you should cancel the breathing space for some or all of the debts, unless you think your client’s personal circumstances would mean the cancellation is unfair or unreasonable. You must make this decision within 35 days of the start of the breathing space, or 35 days of the date an additional debt was added.
- You should communicate your decision to the creditor and your client, where necessary.
If you decide not to cancel the breathing space or a breathing space debt, you must inform the creditor of your decision in writing, but you do not have to tell your client about your decision.
If you decide to cancel the breathing space, or some or all of the breathing space debts, you must inform your client of this decision and update the electronic service. You must put your reason for the cancellation into the service. This will automatically send notifications to the relevant creditors, who can then reinstate enforcement action, interest, fees and any other charges. However, creditors will not be able to apply interest, fees or other charges that would have normally accrued for the period the debt was included in the breathing space.
If you have carried out a review of a breathing space at the request of a creditor request and decided to not cancel anything, the creditor can apply to the court for a review. The creditor cannot apply to the court unless you have already carried out your review and told them of your decision not to cancel the breathing space or breathing space debts.
They must apply to court within 50 days of the start of the breathing space, or 50 days from the date of their notification about an additional breathing space debt. Your client will receive a notification from the court if the creditor does this.
The grounds for the creditor’s application to the court for a breathing space review are the same as those for when they requested a review from you. If the court decides the whole breathing space or some or all of the creditor’s debts should be cancelled from the breathing space, they will tell:
- your client
- the creditor who made the application
- the Insolvency Service
When we are notified, we’ll update the register and tell relevant creditors that the breathing space has ended, or that the debt they are owed is no longer in the breathing space. However, creditors must not charge your client retrospectively for any interest or charges accrued during the breathing space period, unless the court allows them to.
You must carry out a midway review for your clients in a standard breathing space, between days 25 and 35.
You do not need to carry out a midway review for clients in a mental health crisis breathing space but must instead keep in contact with their nominated point of contact.
The purpose of the midway review is to make sure you are happy that your client is complying with the standard breathing space requirements and that the standard breathing space should continue for the full 60 days. You’ll need to use your professional judgement to assess whether:
- your client is complying with their obligations
- a debt solution is in place for the standard breathing space debts
- you have been able to contact your client about the standard breathing space
You can also combine a creditor’s request for a review with the midway review.
There are 3 steps to the midway review:
- Assess whether your client is complying with their obligations. This includes them accessing debt advice, paying their ongoing liabilities, not seeking additional credit over £500, and engaging appropriately with you. You should check whether you’ve had any complaints or further information about your client that might be relevant.
- Check whether your client has entered a debt solution. If they have, their standard breathing space does not need to continue beyond the midway review.
- Decide whether the standard breathing space should continue. If you decide that it should continue, you do not need to do anything else. If you think that your client is not complying with their obligations or you know that they have entered a debt solution, then you have to decide whether or not to cancel their standard breathing space. You do not have to cancel a standard breathing space if you think that your client’s personal circumstances would make the cancellation unfair or unreasonable. If your client has not met their obligation to pay an ongoing liability, you do not have to cancel the standard breathing space if your client does not have the financial means to pay. This could be due to a financial shock, such as losing their job, that meant your client was not able to meet their obligations.
If you decide it’s necessary to cancel a standard breathing space after a midway review, you must:
- tell your client before you do this (if you are able to)
- update the electronic service
The electronic service will update the breathing space register to show the cancellation. This will take effect on the following day. The electronic service will send a notification to all relevant creditors about the cancellation, including the reason it was cancelled.
You do not have to hold a midway review with your client if they are in a mental health crisis breathing space. Instead, you must request information about their mental health crisis treatment, and take appropriate action:
- Between days 20 and 30 after the mental health crisis breathing space starts, you should contact your client’s nominated point of contact. This is to check that your client’s mental health crisis treatment is continuing. If your client is still receiving crisis treatment, the nominated point of contact should tell you this, and the mental health crisis breathing space can continue. They should not give you any other information about your client’s care or their condition.
- You’ll need to contact your client’s nominated point of contact again within the next 20 to 30 days to check if your client is still receiving mental health crisis treatment. You need to repeat this contact every 20 to 30 days from the date of last contact, for as long as your client’s in crisis treatment.
- If your client is not receiving crisis treatment anymore, the nominated point of contact should tell you. By the end of the following business day, you must update the electronic service with the date your client stopped receiving mental health crisis treatment. The electronic service will update the breathing space register and send notifications to creditors and agents (if they have any) to tell them the mental health crisis breathing space is ending. Your client’s mental health crisis breathing space will end 30 days after the date they stopped receiving mental health crisis treatment.
If at any stage you do not receive a response to your request for information from your client’s nominated point of contact, you must update the electronic service to record this. The mental health crisis breathing space will end 30 days after the date of your last request. You do not need to make any further requests for information from your client’s nominated point of contact.
You must cancel the mental health crisis breathing space if:
- you think the evidence provided by the Approved Mental Health Professional (AMHP) contains inaccurate, misleading or fraudulent information
- your client asks you to cancel it
However, you do not have to cancel the mental health crisis breathing space if you think that your client’s personal circumstances would make the cancellation unfair or unreasonable. This does not apply if your client has requested that you cancel it.
If you decide to cancel a mental health crisis breathing space, you must:
- tell your client before you do it, if you are able to
- send notifications to your client and the Insolvency Service using the electronic service
The cancellation will take effect on the day after the date the electronic service has updated the breathing space register. The electronic service will send a notification to all relevant creditors and their agents who received notification about the start of a breathing space) to tell them about the cancellation. This will include the reason for the cancellation and the date.
If your client dies while their debts are in a breathing space, you must update the electronic service with the reason for the cancellation, and the date of death as soon as possible. The breathing space will finish on the following day.
Once you have done this, the electronic service will update the breathing space register and send a notification to all creditors and their agents who received a notification about the start of a breathing space.
You should tell your client that the debts in the breathing space are still owing. They have not been written off or reduced and must still be dealt with. The purpose of the breathing space was to give your client the time and space to deal with their problem debt, with help from you.
Once creditors have been notified of the end of the breathing space, they can:
- start applying interest, fees, penalties and charges to their debt from the date of the end of the breathing space.
- take any action to enforce their debt, including contacting your client
- resume or commence legal proceedings against your client regarding the debt
Creditors cannot take enforcement action if your client has already entered a debt solution, such as a debt relief order or bankruptcy. They also cannot take action if your client has made a formal arrangement with their creditors to deal with their debt, such as an individual voluntary arrangement.
At the end of a breathing space, creditors cannot ask for payment from your client for interest, fees, penalties and charges that have accrued, or would have accrued, during the breathing space, unless a court has allowed this.
Once the mental health crisis breathing space is finished, creditors can start to take action again, just as they can after a standard breathing space ends. Your client might need another period of protection from creditor enforcement action and help in dealing with their debt. In these cases, your client can take debt advice, and apply for a standard breathing space. A debt adviser will consider if they’re eligible and it’s appropriate for them.