Debt Respite Scheme (Breathing Spaces) Procedure

1. Using this Procedure

This procedure is for Approved Mental Health Professionals (AMHP's), Social Workers, Occupational Therapists and any other adult social care practitioners who are working directly with people who have care and support needs or carers that are experiencing issues with debt.

It provides information about the Debt Respite Scheme, how to make an application for a breathing space and what happens when a breathing space starts and ends.

Local authority Debt Advisors may find the procedure useful but should follow specific local and government guidance when fulfilling their own legal responsibilities under the Regulations.

See: Guidance for money advisors

2. Final Demand Guide

Final Demand is a guide that encourages health and social care professionals to ask the people they’re supporting about their financial circumstances, helping them to access free debt advice before they reach crisis point. It provides basic advice for health and social care workers, describing how they can practically help people with debt and mental health problems.

See: Final Demand.

3. What is the Debt Respite Scheme?

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 came into force on 4th May 2021.

Following an application and where all eligibility criteria is met, it gives any adult with a debt problem legal protection from their creditors during the 'breathing space' period.

There are 2 different types of breathing space:

All breathing space applications must be made through and started by either a Debt Advice Provider (Debt Advisor) authorised by the Financial Conduct Authority (FCA) to provide debt counselling, or by a local authority where they provide debt advice to residents.

There is a legal obligation to consider all applications made.

4. Applying for a Standard Breathing Space

Who can apply?

If the person has capacity to apply

If the person has capacity to apply for a standard breathing space they should make the application themselves, or if they have a Lasting Power of Attorney, instruct them to make the application on their behalf.

If a person with mental capacity needs help to apply but does not have a Lasting Power of Attorney, they can be supported by anyone of their choosing. For example a carer, family member, friend or advocate.

If the person lacks capacity to apply

Note: A mental capacity assessment must be completed before making a decision that the person lacks capacity to apply for a standard breathing space.

Note: After the person has been assessed as lacking capacity to apply, the best interest principle must be applied to determine whether or not to make the application. For guidance about assessing mental capacity and making a best interest decision see: The Mental Capacity Act 2005 Resource and Practice Toolkit.

If a person lacks capacity, and making the application is in their best interests, it should ideally be made by someone with the legal authority to do so, normally a Lasting Power of Attorney or a Deputy appointed by the Court of Protection.

If there is nobody with the legal authority to do so, the application can be made by any other appropriate person. Who is deemed most appropriate will be determined by the specific circumstances of the case and could be a carer, family member, health and social care professional or advocate.

Signposting to a local Debt Advisor

If the person has capacity to apply they (or, if instructed, their Lasting Power of Attorney) should be signposted to a local Debt Advisor. Each Debt Advisor is likely to have their own process for obtaining the information they need upon which to determine whether a breathing space should be started. This could be over the telephone, via email or through a face to face meeting.

Citizens Advice

Individuals can be signposted to the Citizens Advice debt advice line, where they can be supported to find a local debt advisor:

Tel: 0800 240 4420
Online: Citizens Advice

Money Advice Service Debt Advice Locator

This is a free service that allows people to search for debt advice in their local area.

See: Where to get free debt advice

Making an application-practitioners

This part of the procedure only applies if the person lacks capacity and there is nobody with the legal authority to act.

Information to gather before contacting a Debt Advisor

All of the following information must be gathered:

1. The person's full name;
2. The person's date of birth;
3. The person's usual address;
4. Details of all debts they owe;
5. Contact details for all creditors (to the best of your knowledge);
6. If debts relate to a business the person owns, the trading name of their business and business address.

It is important to make sure that account numbers, reference numbers etc. are all gathered.

Nominated point of contact

As the person lacks capacity, the Debt Advisor will not be able to communicate with them directly about the application. An appropriate person should be nominated for this purpose and their name and contact details provided to the Debt Advisor along with the above information.

The nominated point of contact may or may not be the practitioner making the application, depending on the circumstances.

Submitting the information

The information should be submitted in line with local requirements and processes.

Once the information has been submitted to the Debt Advice Provider, you have no further role unless you are acting as the nominated point of contact.

5. Applying for a Mental Health Crisis Breathing Space

Who can apply?

There is no expectation that a person experiencing a mental health crisis should make their own application for a breathing space.

Applications can instead be made on their behalf by a representative or professional:

1. Approved Mental Health Professionals (AMHP's);
2. Care Co-ordinators;
3. Mental Health Nurses;
4. Social Workers;
5. Independent Mental Health Advocates (IMHA's);
6. Relevant Person's Representatives (under the DoLS); and
7. Any other appropriate person.

If the person objects

If the person objects to an application being made and has the capacity to do so, the application should not be made.

If the person lacks capacity

Note: A mental capacity assessment must be completed before making a decision that the person lacks capacity to object to the application being made.

Note: After the person has been assessed as lacking capacity to object, the best interest principle must be applied to determine whether or not to make the application.

For guidance about assessing mental capacity and making a best interest decision see: The Mental Capacity Act 2005 Resource and Practice Toolkit.

If a person lacks capacity and making the application is in their best interests, it can be made by anybody listed above as able to apply.

Making an application- AMHP's

This part of the procedure applies to AMHP's only.

Applications for a mental health crisis breathing space must be submitted using the Debt Respite Scheme Form (Evidence of Mental Health Crisis Treatment).

The form can be downloaded from the government website.

See: Debt Respite Scheme Form

All sections of the form must be completed.

Section 2 of the Form

Section 2 of the Form is certification that the person is receiving mental health crisis treatment. It can only be completed by an AMHP.

By completing section 2 of the Form you are certifying one of the following to be true:

1. The person has been detained in hospital for assessment or treatment (including under part 3 of the Mental Health Act 1983); or
2. They have been removed to a place of safety by a police constable; or
3. They are receiving any other crisis, emergency or acute care treatment in hospital or in the community from a specialist mental health service in relation to a mental disorder of a serious nature.

It is your decision how you reach your judgement about the above. There is no requirement to have completed a Mental Health Act assessment.

Requests from others to complete section 2

Sometimes another professional, or the person's carer may complete all other sections of the Form, and request your help with section 2 only. This is acceptable under the Regulations.

Note: You should not complete section 2 if you do not believe in your professional capacity that the person is receiving mental health crisis treatment as set out above.

Section 3 of the Form

A point of contact must be nominated for all mental health breathing spaces. Their role is to receive updates from the Debt Advisor and to also confirm to the Debt Advisor on a regular basis that the person is still receiving mental health crisis treatment.

The nominated point of contact can be:

1. You, as the AMHP making the application;
2. Another AMHP;
3. A Mental Health Nurse.

For mental health crisis breathing spaces the following are not permitted to act as a nominated point of contact:

1. Carers;
2. Advocates;
3. Representatives.

Making an application - other practitioners

This part of the procedure applies to Social Workers, Occupational Therapists and any other adult social care practitioner making the application.

Applications for a mental health crisis breathing space must be submitted using the Debt Respite Scheme Form (Evidence of Mental Health Crisis Treatment).

The form can be downloaded from the government website.

See: Debt Respite Scheme Form

All sections of the form must be completed.

Section 3 of the Form

A point of contact must be nominated for all mental health breathing spaces. The role of the point of contact is to receive updates from the Debt Advisor and to also confirm to the Debt Advisor on a regular basis that the person is still receiving mental health crisis treatment.

The nominated point of contact can be:

1. The AMHP completing Section 2 of the Form (if they agree to this);
2. Another AMHP;
3. A Mental Health Nurse.

A social care professional would not normally act as the nominated point of contact, however they are not prevented from doing so under the Regulations.

For mental health crisis breathing spaces the following are not permitted to act as a nominated point of contact:

1. Carers;
2. Advocates;
3. Representatives.

You should complete this section of the form after liaising with relevant mental health professionals to agree who will act.

Section 4 of the Form

You should complete this section of the form with as much information as you have about the person's debts. However, do not worry if the information is not comprehensive.

Section 2 of the Form

Section 2 of the Form is certification that the person is receiving mental health crisis treatment. It can only be completed by an Approved Mental Health Professional (AMHP).

You should liaise with the local AMHP service to request this section of the Form is completed.

Section 2 completed

If an AMHP completes Section 2 of the Form the application can be submitted.

Section 2 not completed

If the AMHP decides that the person is not in receipt of mental health crisis treatment they are not lawfully permitted to complete Section 2 of the Form.

Without a completed Debt Respite Scheme Form the person will not be eligible for a mental health crisis breathing space. However, they can still apply for a standard breathing space.

See: Section 4, Applying for a Standard Breathing Space

Submitting the application-in all cases

All applications for a mental health crisis breathing space should be submitted to Mental Health and Money Advice.

Mental Health and Money Advice are the dedicated Debt Advisor service for mental health crisis breathing spaces in England.

For information about the latest referral process see: Mental health crisis breathing space referral form.

6. The Authorisation Process

Eligibility criteria

The Debt Advisor is responsible for carrying out all checks to ensure that all of the following eligibility criteria for a breathing space is met:

1. The person is an individual;
2. They owe a qualifying debt to a creditor (see 'Establishing qualifying debts' below);
3. They live or usually reside in England or Wales;
4. They do 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; and
5. There is not already a breathing space in place.

For a standard breathing space the Debt Advisor must also make sure that the person has not had a standard breathing space within the last 12 months.

Establishing qualifying debts

To be eligible for a breathing space the person must have at least one qualifying debt.

Examples of qualifying debts include:

1. Credit cards;
2. Store cards;
3. Personal loans;
4. Pay day loans;
5. Overdrafts;
6. Arrears on utility bills;
7. Most government tax and benefit debts;
8. Tenancy arrears; and
9. Any other debt not listed as an 'excluded' debt.

Most debts are qualifying debts. Excluded debts are limited to:

1. Debts incurred because of fraud;
2. Fines imposed by a court;
3. Secured debt (e.g. mortgages, hire purchase agreements);
4. Obligations from a confiscation order;
5. Child maintenance;
6. Crisis loans from the social fund;
7. Student loans;
8. Damages for the death or injury of another; and
9. Advance payments of Universal Credit and council tax that has not yet fallen.

Debt review and alternative options

For a standard breathing space application only, when the Debt Advisor has established that the above eligibility criteria is met, they must then review the person's financial situation, offering them advice and exploring alternative options that may be available to resolve the debt issue. If an alternative option to managing the debt is available, the Debt Advisor should not start a breathing space.

For a mental health crisis breathing space there is no requirement for the Debt Advisor to carry out this review or provide this advice before starting a breathing space. They must however be satisfied from the information on the Debt Respite Scheme Form that the person cannot, or is unlikely to be able to, repay all or some of their debt when it falls due.

Confirming a mental health crisis

Applicable to mental health crisis breathing spaces only, the Debt Advisor must also be satisfied that the person is receiving mental health crisis treatment.

The Regulations specify that Section 2 of the Debt Respite Scheme Form completed by an AMHP is the only way that this can be confirmed by the Debt Advisor.

If Section 2 has not been completed by an AMHP a mental health crisis breathing space cannot be started under any circumstances.

Starting a breathing space

The Debt Advisor must start a breathing space when;

1. All eligibility criteria above is met;
2. The person cannot, or is unlikely to be able to, repay all or some of their debt when it falls due.

To start a breathing space, the Debt Advisor will enter a range of information about the person and their qualifying debts onto the electronic system of the Insolvency Service. The Insolvency Service will then add them to the Breathing Space Register and notify all of the creditors.

The breathing space start date is always the day after the Debt Advisor has entered the information.

7. During the Breathing Space

Enforcement action and contact

1. Creditors must stop all recovery and enforcement action on qualifying debts for the duration of the breathing space;
2. Creditors must not contact the person in relation to collecting one of the qualifying debts;
3. If the creditor wishes to discuss the qualifying debt owed to them or the breathing space itself, they must contact the Debt Advisor.

Excluded or new debt

If the person has any excluded debt, or accrues any new debt during the breathing space period creditors can contact them about collection of those debts.

For example, if the person makes a new purchase using their credit card or takes out a new loan these debts will not be included in the breathing space.

Ongoing liabilities

In a standard breathing space only, certain debts are classified as 'ongoing liabilities'.

On-going liabilities are routine scheduled payments that the person will be asked to pay during the breathing space period.

Specifically they are:

1. Mortgage repayments;
2. Property rental or lease payments;
3. Insurance agreements;
4. Taxes, duties and national insurance contributions;
5. Local taxes rates for the local authority;
6. Water, sewerage, electricity, gas, heating oil or solid fuel bills.

The breathing space offers protection for any arrears owing at the time it starts but the person remains liable for any other payments that fall due during the breathing space period.

8. Reviewing the Breathing Space

The responsibility for reviewing all breathing spaces lies with the Debt Advisor.

Standard breathing space

The Debt Advisor must carry out a midway review to explore any steps the person is taking, or plans to take, to manage the debt once the breathing space comes to an end and to offer advice about available options.

Steps could include:

1. Entering a debt solution, such as a debt relief order or bankruptcy; or
2. Making a formal voluntary arrangement with the creditor to deal with the debt.

Mental health crisis breathing space

There is no requirement for the Debt Advisor to carry out a review during a mental health crisis breathing space, so long as the person is continuing to receive mental health crisis treatment. The Debt Advisor will communicate regularly with the nominated point of contact to seek this assurance.

Once the mental health crisis treatment has ended the breathing space continues for a further 30 days to allow the Debt Advisor to offer advice about how the person can manage the debt once the breathing space comes to an end. If the person is likely to need more than 30 days to resolve their debt issues they can make a subsequent application for a standard breathing space.

Changes in circumstance

If you become aware of a change in the person's financial circumstances that may impact on their eligibility for any type of breathing space you should let the Debt Advisor know.

9. What Happens when a Breathing Space Ends?

Taking action to enforce the debt

In all cases, after a breathing space has ended creditors can resume or begin taking action to enforce the debt.

This includes:

1. Contacting the person directly; and
2. Resuming or beginning legal proceedings to collect the debt.

However, creditors cannot take further enforcement action if, during the breathing space period the person has already;

1. Entered a debt solution, such as a debt relief order or bankruptcy; or
2. Made a formal voluntary arrangement with them to deal with the debt.

Fees, interest, penalties and charges accrued

When the breathing space ends the creditor can begin applying fees, interest, penalties and charges from this date.

They cannot apply those that have been accrued (or would have been accrued) during the breathing space period unless a court has expressly authorised this.

10. Further Applications

Standard breathing spaces

A person can only have 1 standard breathing space per annum. If you know that they have already had a breathing space in that time a further application should not be made. However, you should ensure that they are signposted to a Debt Advisor with whom they can review their circumstances and obtain good advice.

Mental health crisis breathing spaces

There are no limits to the number of mental health crisis breathing spaces a person can have.

Applying for another breathing space

The process of application for a further breathing space is the same as the process for the first.

Depending on the type of breathing space, the process will be set out in either section 6 or section 7 of this procedure.

11. Further Information and Guidance

The government has produced a range of online guidance to support Debt Advisors, creditors and those making mental health crisis breathing space applications:

Guidance for money advisors

Guidance for creditors

Guidance for AMHP and others applying for a mental health crisis breathing space

12. Safeguarding Implications

If the person has (or may have) a care and support need it is important to ascertain that their debt issue is not the result of financial abuse, exploitation, domestic abuse or any other form of abuse or neglect.

A safeguarding concern should be raised and appropriate action taken to protect them from such abuse when it is, or may be occurring.

For further information, see: Safeguarding Adults

13. Concerns about a Debt Advisor

If you, the person or their representative has concerns about the conduct of the Debt Advisor handling the application a complaint can be made to the Financial Ombudsman.

Telephone: 0800 023 4567

Online: Complain online