Breathing Space: The Debt Respite Scheme
How will it affect High Court Enforcement?
The Debt Respite Scheme (Breathing Space) comes into force on 4th May and will give someone in problem debt the right to legal protections from creditor action including High Court enforcement.
In this article, Neil Jinks considers how this will affect debts in the High Court enforcement process and creditors action more generally.
The legislation this article references is The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020.
There are 2 types of breathing space: a standard breathing space and a mental health crisis breathing space.
A standard breathing space is available to any debtor with problem debt. It gives them legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors and freezing most interest and charges on their debts.
A mental health crisis breathing space is only available to a debtor who is receiving mental health crisis treatment. If an Approved Mental Health Professional (AMHP) certifies a debtor is in mental health crisis treatment, the debtor or someone else might ask an adviser for a mental health crisis breathing space on their behalf. The mental health crisis breathing space has some stronger protections than the standard breathing space. It lasts as long as the debtor’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
HCEO appointed to enforce a breathing space debt.
Where a creditor previously appointed a High Court Enforcement Officer (HCEO) to act on their behalf for a breathing space debt, they must tell them about the breathing space and explain what it means.
Stopping enforcement action
Once a breathing space has started, you or anybody acting on your behalf must not take any enforcement actions against the debtor or anyone who is jointly liable with them for a breathing space debt.
During a breathing space, an enforcement agent must not:
- give notice to the debtor about taking control of goods.
- visit the debtor’s home or business to take control of goods.
- take control of goods.
- sell goods belonging to the debtor, unless the enforcement agent took them before the breathing space started.
- serve notice seeking possession of a property let to the debtor based on rent arrears due up to the start of the breathing space or take possession of a property let to a debtor after serving notice prior to the start of a breathing space.
- contact the debtor to discuss the enforcing a breathing space debt.
If an enforcement agent has taken control of any goods by removing them and securing them elsewhere before a breathing space started, the goods may be sold during the breathing space and the costs of the sale deducted from the proceeds. However, fees accrued during the breathing space for storage of those goods cannot be charged either during the breathing space, or after it ends.
Where a court judgment or order has been issued
A court or tribunal must make sure any action or proceeding to enforce a court order or judgment about a breathing space debt does not progress until the breathing space ends. The exception is where they have allowed a creditor to continue action. During a breathing space, a court must not:
- hold a hearing.
- make or serve an order or warrant, writ of control, writ of execution or judgment summons.
- instruct an enforcement agent to serve an order, warrant, writ of control, writ, execution, or judgment summons.
The breathing space does not stop the court or tribunal from sending notices or correspondence to the debtor about legal actions or proceedings.
The debtor should be made aware by their adviser that existing legal proceedings might continue after the breathing space ends. The debtor should also be made aware if a time limit for a creditor’s enforcement steps or new legal claims related to a breathing space debt run out during the breathing space, that time limit is extended by another 8 weeks after the breathing space ends.
How long does a standard breathing space last?
Usually, a standard breathing space will automatically end 60 days after it starts. The electronic service will automatically update the breathing space register and send a notification to all creditors and their agents, if there are any. The breathing space can be cancelled earlier than 60 days if:
- the debtor goes into a debt solution before the 60 days is over.
- the debtor does not meet their obligations.
- their adviser decides to, after the midway review or after a creditor asks for a review
How long does a mental health crisis breathing space last?
A mental health crisis breathing space lasts for as long as the client is receiving mental health crisis treatment, and another 30 days after that. The breathing space can be cancelled earlier than this if:
- the adviser considers that the evidence form received included inaccurate, misleading, or fraudulent information.
- the adviser decides to, after a creditor asks for a review.
- the debtor asks their adviser to.
After a standard breathing space has ended
After a standard breathing space has ended, the debts that were in the breathing space are still owing. They have not been written off or reduced and must still be dealt with. The purpose of the breathing space was to give the debtor the time and space to deal with their problem debt, with help from a debt adviser.
Once creditors have been notified of the end of the breathing space, they can:
- start applying interest, fees, penalties, and charges to their debt from the date of the end of the breathing space.
- take any action to enforce their debt, including contacting the debtor.
- resume or commence legal proceedings against the debtor regarding the debt.
Creditors cannot take enforcement action if the debtor has already entered a debt solution, such as a debt relief order or bankruptcy. They also cannot take action if the debtor has made a formal arrangement with their creditors to deal with their debt, such as an individual voluntary arrangement.
At the end of a breathing space, creditors cannot ask for payment from the debtor for interest, fees, penalties, and charges that have accrued, or would have accrued, during the breathing space, unless a court has allowed this.
After a mental health crisis breathing space has ended
Once the mental health crisis breathing space is finished, creditors can start to take action again, just as they can after a standard breathing space ends. The debtor might need another period of protection from creditor enforcement action and help in dealing with their debt. In these cases, the debtor can take debt advice, and apply for a standard breathing space. A debt adviser will consider if they are eligible and it is appropriate for them.
Please notify us as soon as you become aware of a breathing space to enable us to take the appropriate action. Please also keep us advised of further developments so that we can either proceed as soon as it is possible to do so or cease action where appropriate.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. Court Enforcement Services Ltd is not responsible for any activity undertaken based on this information.
Further Information
Guidance for creditors:
Debt Respite Scheme (Breathing Space) guidance for creditors – GOV.UK (www.gov.uk)
For information for debtors about breathing space, contact:
Specialist Debt Advice Service.
For information on your responsibilities relating to data protection, contact: Information Commissioner’s Office.
For more information about Court Enforcement Services and High Court Enforcement, contact the author:
Neil Jinks FCICM IRRV
Head of Client Development & Communications
M: 07542304328
E: n.jinks@courtenforcementservices.co.uk
You can instruct us online via our website:
https://www.courtenforcementservices.co.uk/instruct-us/
or contact our BD team for more information or support:
Email: bd@courtenforcementservices.co.uk
