The Regulations are designed to give debtors legal protection from their creditors and to create a “breathing space” so that they are able to seek appropriate advice or to implement a manageable payment plan for their debts. The debts must be qualifying debts as identified under the Regulations.
There will be two types of breathing space. The standard breathing space or the mental health crisis breathing space. The standard breathing space allows debtors 60 day protection whereas the mental health crisis breathing space allows as long as the debtor is receiving treatment for the condition plus 30 days thereafter.
A debtor will need to apply for the breathing space through either a debt management company or their Local Authority. If the debtor is granted breathing space then the Insolvency Service will add the debtor to a register, much like the Personal Insolvency Register.
Debts that are included in the breathing space must be qualifying debts as defined in the Regulations. Debts are defined as monies owed to creditors by debtors and also liabilities which create obligations for the debtor to pay monies to a creditor. Most debts will be counted as a qualifying debt, but these could include but are not limited to:
The debts need to have been incurred before the debtor applied for the breathing space under the Regulations. Debts incurred after will not be included and are recoverable as the creditor sees fit.
Once the debtor has been granted the breathing space, notification will be sent to the creditor by email, post or personal service. Service by email and personal service will be deemed served the same day. If the notification is given by post then it will be deemed served 4 business days after the date the notification was posted.
If the debtor is granted breathing space then a legal moratorium will be created whereby the creditor will not be able to take action against the debtor for the debt (as long as that debt is included). Upon receiving notice the creditor should check their records to identify any debts which are included in the breathing space. Once the relevant debts have been identified the creditor must:
For further help or assistance in relation to this article, please contact Dan Elsworth on 0113 2802000 or firstname.lastname@example.org.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.