The Treasury has announced plans to move forward with its ‘breathing space scheme’, a pledge made by the government in its 2017 manifesto. The scheme aims to give people in problem debt the opportunity to take control of their finances and put them on a sustainable footing. In this newsletter, we look at the proposed scheme.

According to The Money Charity, the average debt per UK household in April 2019 was £59,713 (including mortgages).

The proposed scheme would give individuals who have a problem debt the right to a 60-day breathing space period. During this time, creditors cannot contact them to request payment, no enforcement action can be taken against them and interest payments will be frozen.

The government intends that this will:

  1. Provide sufficient protections for individuals to help them enter into a sustainable debt solution; and
  2. Encourage more individuals to seek debt advice.

Helping newly injured patients with their finances and debt is something our team deals with regularly. This is a common problem for people who find themselves in hospital for an extended period of time. Their accident can lead to a loss of income and/or their hospital stay can mean that they are no longer eligible for benefits.

We often speak to creditors in light of a patient’s new circumstances and ask for interest to be frozen during their recovery or debts written-off if they are unable to meet them. Between 2007 and 2017, we helped 207 patients of one legal service with various financial issues. During this time, a total of £129,000 of patient debt was written off by creditors.


What is ‘problem debt’?

Debt is considered problematic where the individual has fallen seriously behind on payments or had utilities disconnected in the past year.

The types of debt it includes will cover debts owed to the government, such as council tax arrears and benefits overpayments. This is highly relevant at the moment, due to the recent changes to Universal Credit.



To be eligible for the breathing space period, you must take professional debt advice . This should allow the person in debt to take control and put a payment plan in place. It also means that future debts may be prevented or intervened with at an earlier stage.


Mental health

According to the Money and Mental Health Policy Institute, 46% of people in problem debt have problems with mental health.

The breathing space scheme provides an added layer of protection for those suffering with their mental health. If an individual is working with the NHS to receive support for their mental health, they will benefit from the breathing space scheme without having to engage with professional debt advice during their treatment. As soon as their treatment has concluded, the 60-day scheme will begin and at this point, debt advice will need to be sought.

This allows the person receiving treatment to concentrate on their mental health, knowing that their debts are not continuing to mount up and financial advice will be waiting for them when they are ready.


Statutory debt repayment plan

The proposals also include a repayment plan, which is similar to the breathing space scheme.

The plan provides for individuals to enter into an agreement with the companies to whom their debt is owed. The intention is that the repayment plan is flexible, to take into account changing circumstances. During this plan, all enforcement actions against the individual will stop, and creditors will be unable to charge interest, default fees or charges on any of the debts included in the plan.



Overall, this appears to be a positive move to help those suffering with debt and the resulting impact this may have. The breathing space scheme is still at the consultation stage, but the plan is for it to be implemented in 2021.


If you are in debt and would like to receive support, please contact: Citizen’s Advice or Step Change

For more information about the Breathing Space Scheme, the June 2019 consultation outcome can be found here.


This article was written by our paralegal Erin Cook



This article was published as part of ‘The Legal Service Newsletter’. The Legal Service is provided by Stewarts’ pro bono team as part of the firm’s commitment to help people with serious injury. The service offers free advice to patients when they need it most.

To make a referral to The Legal Service, please contact Kara Smith by phone on 020 7822 8000 or by email at

Subscribe – In order to receive our news straight to your inbox, subscribe here. Our newsletters are sent no more than once a month.



You can find further information regarding our expertise, experience and team on our Personal Injury pages.

Key Contacts

See all people