On the 17 November 2020, The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 were made.
The Regulations are set to come into force from the 4th May 2021 (save for a few provisions relating to Wales which will come into force when the Renting Homes (Wales) Act 2016 comes into force).
This regulation essentially allows a debtor to seek professional debt advice and enter into a moratorium period (which does not appear to be a defined period) which means that any creditor, during that period cannot take steps to enforce the debt.
It applies to most type of debts including County Court and High Court Judgments (with few exceptions) and, a kick in the teeth for Landlords, it also applies to Rent Arrears.
So, if you have rent arrears, or an unsatisfied judgment, or any other debt, perhaps like unpaid invoices, you might not be able to enforce or take any action if the debtor takes the required steps to enter into the moratorium.
Enforcement has been defined in the regulation and this includes:
• Commencing Court action
• Seeking to apply interest, fees, penalties, and charges
• (The kicker for Landlords) – serving a Section 8 notice under Grounds 8, 10 or 11
Also, you must not contact the debtor direction. All contact must be via the debt advisor.
My reading of the regulation seems to suggest that once the moratorium period has ended, the debt that was included in the moratorium cannot be considered when calculating the total sum owed.
If Court proceedings have already commenced at the start of the moratorium, the creditor must notify the Court and Court proceedings can continue (with permission of the court). However, if a bankruptcy petition has been issued, these proceedings must be stayed. If a judgment is obtained, the Court must take steps to ensure enforcement does not take place.
For those with debts that might be subject to limitation (i.e. the usual 6-year rule), if a moratorium takes place, limitation is extended by 8 weeks and this 8-week period starts from the end of the moratorium. That essentially appears to be the only real protection a creditor has.
Creditors can challenge a moratorium, but they must do so within 20 days of the moratorium taking place. If the challenge is unsuccessful, the creditor can apply to the Court to cancel the moratorium provided the various conditions are met.
Here at White Collar Legal, we can help you with recover and enforcement of debts which includes providing advice on the various methods of enforcement, conducting asset and financial searches and assisting you with any Court paperwork. You can contact us on 0151 230 8931 or feel free to send an email to [email protected]