Debt Recovery: The new Debt Respite Scheme – What enforcement action is stopped under the Scheme?
We recently published an article that set out the new Debt Respite Scheme (Breathing Space) (“the Scheme”) which is in force from 4 May 2021, following The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 coming into force. The purpose of this recent article is to outline what enforcement is affected by the Scheme in further detail.
What enforcement is stopped under the Scheme?
The enforcement methods postponed are outlined within the Government guidance in detail and include the following (amongst others):
- Attempting to enforce security for a debt that falls within the Scheme;
- Obtaining a warrant or writ of control;
- Obtaining a liability order;
- The instruction of a County Court Bailiff or High Court Enforcement Agent;
- Starting any action or legal proceedings (including bankruptcy petitions);
- Applying for Default Judgment for monies owed by the debtor;
- Serving notice to take possession of a property in relation to rent arrears due up to the start of the breathing space period or seeking possession of a property after serving notice prior to the start of the breathing space.
If you have already issued a claim in the courts against a debtor, you must notify the Court or Tribunal in writing as soon as you become aware of the breathing space being in force. It will then be down to the court to decide whether to grant permission for the matter to proceed or not. The proceedings may be ‘stayed’, in which case they can continue once the breathing space has ended. If there is a limitation period for a claim that has expired during this breathing space, this is extended to 8 weeks after the breathing space ends.
Applying to cancel a breathing space
It is possible to apply to the Court to cancel a breathing space, if a creditor does not agree with this being in force. This must be done within 50 days of the start of a breathing space, or within 50 days of the start of a breathing space for an additional debt.
The grounds that apply are outlined below:
- That the breathing space unfairly prejudices the interests of the applicant; or
- There has been a material irregularity surrounding the application for breathing space, namely one of the following:
- The debtor did not meet the relevant eligibility criteria when the application was made;
- The debt owed is not a moratorium debt; or
- The debtor has sufficient funds to settle the debt.
A creditor will be notified when a breathing space ends, by being sent a notification.
How can Ellis Jones help you?
If you are a debtor faced with a creditor that is applying pressure on you to settle a debt owed to them, or, you are a creditor that has a debt owed to you and you want to make sure you pursue the debt in the correct way, we would be happy to discuss your case and see if we are able to assist. Should you wish to discuss this further, please do not hesitate to contact our specialist Dispute Resolution team on 01202 525333 or Maria.Evans@ellisjones.co.uk.