Monday, March 22, 2021
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 provide debtors with two potential “breathing spaces.” There is a “standard” breathing space and a “mental health crisis” breathing space.
You will be notified if a debt owed to you is in a breathing space. If it is, you must:
- stop all action related to that debt; and
- apply various protections.
Further information is set out below.
A standard breathing space lasts for up to 60 days and a mental health crisis breathing space lasts as long as the person's mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
Most debts are included in the scheme unless they have been specifically excluded. There are a number of exclusions including secured debt and debt in respect of child maintenance, council tax and student loans etc. It is likely that most debts due to property professionals will be included in the scheme.
Not all debtors are covered by the scheme. To be eligible debtors must be:
The process of starting a breathing space is not undertaken by an individual debtor. Debtors will need to contact a debt advice provider or a council who will start the process for them. A number of other individuals and bodies can also start the process in respect of a mental health crisis breathing space – including carers, social workers and mental health professionals. You will be contacted by the Insolvency Service who will send a notification to you. You may be contacted electronically, by post or by a notification being left at your address.
If you receive a notification you must stop any enforcement or recovery action to recover that debt, by you or any agent you’ve appointed. Prohibited enforcement includes:
Court proceedings will not stop automatically during a breathing space but:
Other parts of the regulations cover the following matters:
It is important to remember that a breathing space has to be triggered by a debtor or someone acting on their behalf – it is not an automatic process. Accordingly, you are not required to take pro-active steps to consider whether a debtor might be entitled to seek a breathing space. This means that you are only required to take steps if you receive notification form the Insolvency Service that a breathing space has started. You will want to ensure that staff are aware of these new regulations so that they understand what the consequences are should they receive a notification from the Insolvency Service. The regulations are quite detailed and complex so a good rule of thumb would be (i) to stop all enforcement action in respect of any notifications you receive and (ii) advise any agents you employ (including debt recovery agents and lawyers) to recover your debts about the breathing space immediately.
The Government has produced detailed guidance on the regulations and that can be accessed via the following link:
Anyone requiring further details can access the Statutory Instrument itself via the following link: