How to ask for Breathing Space with debt?

If you’ve been looking for ways to manage your debt, you may well have heard the term ‘breathing space’ being mentioned. But what is breathing space? And are you eligible to apply for it?

Well, in this guide we’ll dive into the ins and outs of the Breathing Space Scheme, as well as offering some alternative routes for those who aren’t eligible.

What is the Breathing Space Scheme?

The Breathing Space Scheme (sometimes referred to as the debt respite scheme) provides those struggling to repay debts with temporary protection from creditors whilst they seek advice.

Payments will not be paused, but your interest and extra charges will be, giving you the time to seek advice and plan out your next steps.

This temporary protection is usually for a period of up to 60 days. But if you’re seeking treatment for a mental health crisis, this protection can be extended (lasting for the duration of your treatment, plus an extra 30 days).

If you’re accepted for the Breathing Space Scheme:

1. Enforcement action cannot be taken

2. You cannot be contacted about the debts

3. Further interest or charges cannot be applied

Various unsecured debts are included in breathing space schemes, including credit cards, payday loans, personal loans, and even store cards.

Those that aren’t eligible include secured debts (although the arrears can be included), student loans, court fines, personal injury damages, plus debts which are acquired after the breathing space has started.

What are the advantages of breathing space?

Breathing space has various advantages for those struggling. It provides temporary relief from creditor pressures as well as offering a pause on interest and additional charges.

This temporary period gives debtors time to plan and assess their next steps, without the looming pressure of creditor demands. In the breathing space period, debtors can speak with professional advisors, and many contact the Money Advice Service or National Debt line for guidance.

How to apply for breathing space

If you’re looking to apply for breathing space, your first port of call should be speaking to a debt adviser. An adviser will be able to confirm your eligibility, as well as check which of your debts can be included.

To put you forward for a breathing space application, your advisor must be confident that it’s going to benefit you, and that in the set time period, you’ll likely enter into a debt solution.

While it’s free to apply for breathing space, many debt advisors charge fees, so bear this in mind when you begin your search for one.

To be eligible to apply for breathing space, you must:

• Currently live in England or Wales.

• Not have relied on the Breathing Space Scheme in the previous 12 months (this is unless it was related to a mental health crisis).

• Not be an undischarged bankrupt, have a debt relief order, an interim order, or an individual voluntary agreement.

After your breathing space ends, your creditors can contact you again and take further action to retrieve the debts. So, in the relief period, it’s important to ensure a longer-term debt management plan is put in place.

Our guide on how to get out of debt is filled with handy advice, so make sure you spare some time to give it a thorough read through..

Are there any alternatives?

Now, it’s important to note that everyone’s situation is different, and as mentioned, you may not be accepted for the Breathing Space Scheme. But this doesn’t mean that there aren’t other options out there, for instance:

1. Debt management plans: this is an agreement you’ll make with the creditor designed to help you pay back the money owed at a manageable rate. These can be arranged through both debt management companies (authorised by the Financial Conduct Authority) and certain charities too. Debt Management Plans can only be used to pay unsecured debts.

2. Individual Voluntary Arrangements: this is an agreement you make with your creditors to pay off your debts over a certain period. You’ll commit to making timely payments to an insolvency practitioner, who then divides the money among creditors.

3. Debt Relief Orders: these are a way to deal with your debts if you owe less than £50,000, do not own a home, and don’t have much spare income (usually less than £75 a month). With debt relief orders you’ll cease to make payments (including interest) for 12 months. If your financial situation doesn’t improve within this period, the debts may be written off.

Dealing with debt can be tricky, but the Breathing Space Scheme provides people with time to plan out their next steps and regain control of their finances. By understanding the eligibility criteria, as well as the application process, hopefully you’ll now be able to make an informed decision about whether it’s the right pathway for you.

Before you go, make sure to head over to the Moneyboat blog to check out a couple more of our guides. You can read about debt-consolidation, as well as our top tips on how to pay off debt quickly!