A Guide to the ‘Breathing Space’ Initiative

Stop creditor action and freeze interest. David Farmer of Lime Finance Solutions explains how the 60-day Breathing Space scheme provides vital time for borrowers

March 11th, 2026

A key part of borrowing is having a contingency. Lenders do it all the time, they will lend once their ‘contingency’ is in place – whether that be a personal guarantee, charge over property or some other asset.

Borrowers can have their own contingency, but their options are more limited. General insurances can help, so can personal guarantee insurance, ultimately there is a finite range of options for the borrower.

On that note, it is worth covering the Breathing Space initiative. Many borrowers assume it doesn’t, but it also covers secured borrowing and business debt.

Let’s Start

We all know that when debt begins to spiral it takes over everything, the pressure from creditors can feel like your being pressured from all sides, making it nearly impossible to think clearly or work out how to form a sensible pathway out.

Since its introduction in May 2021, the Debt Respite Scheme, more commonly known as Breathing Space, has been a safety net for borrowers in England and Wales. It isn’t a magic wand, it will never make debt disappear, but it is a pause button. It is that chance to breath, take advice, and think.

What is the Breathing Space Initiative?

The initiative provides eligible borrowers with a period of legal protection from their creditors. During this time, most interest and charges on your debts are frozen, and creditors are prohibited from taking enforcement action or even contacting you about the debt.

There are two distinct types of Breathing Space:

Standard Breathing Space: Available to anyone struggling with problem debt. It lasts for up to 60 days.
Mental Health Crisis Breathing Space: Specifically for those receiving mental health crisis treatment. This lasts for the full duration of the treatment, plus an additional 30 days, regardless of how long that treatment takes.

Why This Matters for Borrowers

As a finance specialist, I often see clients who are “asset rich but cash poor.” This means they have viable businesses or properties, but a sudden unplanned shift in circumstances creates a cash shortfall.

The Breathing Space initiative is designed to:

Stop the Clock: It halts the immediate threat of bailiffs, evictions, or court proceedings. It is temporary, think of it as a ‘time out’.
Freeze the Fees: It prevents the debt from growing via penal interest and penalties.
Encourage Professional Advice: To enter the scheme, you must engage with a professional debt adviser. This ensures you are actively working toward a solution. The scheme isn’t a pause without conditions, it is there for borrowers to start resolving issues, not postponing them

“Debt isn’t just a balance sheet issue; it goes deeper than that, it is a life issue. The Breathing Space scheme is that ‘time out’ option that gives borrowers the mental and legal room to structure a way forward.” — David Farmer

Is Your Debt Eligible?

Most personal debts qualify, including credit cards, personal loans, and arrears on essential bills like Council Tax or utilities. Crucially for homeowners and businesses, arrears on mortgages and secured loans can also be included.

Be aware though, you must continue to make your ongoing “live” payments (like your current month’s rent or mortgage) to keep the protection in place. It isn’t a way to avoid debt repayment, it is a scheme to give time for the borrower to resolve issues.

Final Thoughts

If you find yourself under mounting pressure, the worst thing you can do is bury your head in the proverbial sand. Whether it’s a standard 60-day pause or a mental health moratorium, it is about providing assistance to regain control.

If you are concerned about borrowing then your first port of call should be to the lender. You will find that most lenders will want to solve issues amicably. There are resources out there such as S t ep Change that will provide guidance.

FAQ: The Breathing Space Scheme

Does Breathing Space write off my debt?

No, no and no. It is a pause on enforcement and interest. You still owe whatever you borrowed, but the scheme gives you 60 days to work with an adviser on a repayment plan or insolvency solution. This way allowing you to take some control and move toward an amicable solution.

Can I apply for it myself?

No. You must apply through a debt adviser who is authorised by the Financial Conduct Authority (FCA) or a local authority that provides debt advice. Speak with one of the support networks as your first call.

Will it affect my credit score?

While the “Breathing Space” status itself isn’t a permanent mark like bankruptcy, missed repayments will still appear on your credit report. The scheme prevents further damage from court judgments (CCJs) during the 60 day period.

Can my bank still call me?

Once the moratorium starts, creditors (and their agents) are legally required to stop all communication regarding the debt. They cannot ask for payment or threaten action during this period.

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.