Mental health crisis moratoriums

A mental health crisis moratorium, also known as a mental health crisis breathing space, is available to people who are receiving treatment from a specialist mental health service for a serious mental disorder.[1]

A moratorium prevents most creditors from taking enforcement action against debtors who are not able to pay.

There is no limit to how many times a debtor can enter a mental health crisis moratorium.[2]

How long does a moratorium last

A mental health crisis moratorium lasts as long as the person's mental health crisis treatment continues, plus 30 days.[3]

Guidance

Read the guidance for creditors and money advisers from the Insolvency Service.

Read the government guidance on mental health crisis moratoriums on Gov.uk.

To qualify for a mental health crisis moratorium, a person or someone acting on their behalf must show that they:[4]

• owe a qualifying debt to a creditor

• usually live in England or Wales

• are not in a debt relief order, bankruptcy, or an individual voluntary arrangement

• are not already in a breathing space moratorium or mental health crisis moratorium

An approved mental health professional (AMHP) must certify that the person is:

• receiving mental health crisis treatment[5]

• suffering from a mental disorder of a serious nature[6]

People who are not in crisis treatment

A standard breathing space moratorium might be available for debtors who are not receiving mental health crisis treatment.

Find out more about breathing space moratoriums.

The moratorium can start following an application from a debtor or their representatives, carers, or social workers.[7]

A single point of application for a mental health crisis breathing space is available.

Pre-submission checks

Before starting a moratorium, the debt advice provider must check that:[8]

• a mental health crisis moratorium would be appropriate

• the debtor is unable, or is unlikely to be able, to repay some or all of their debts

Evidence of the mental health crisis

The application must include sufficient evidence from an AMHP that the debtor is receiving mental health crisis treatment.[9]

The debt advice provider must be satisfied that the mental health disorder is severe, and that care goes beyond routine treatment.[10] Read a summary of Kaye v Lees on Shelter Legal.

Find the evidence of mental health crisis treatment form on Gov.uk for an AMHP to complete.

There is no complete list of qualifying debts. Common examples of debts that can be included in the moratorium are:[11]

• rent and mortgage arrears

• consumer credit debts such as loans and credit cards

• utility and fuel arrears

• benefit overpayments

• council tax arrears

The moratorium only applies to debts owed at the point of application.[12]

The moratorium applies to additional debts owed to the same creditor if they have already been notified of the moratorium in relation to one debt.[13]

Non-eligible debts

Some debts cannot be included in the moratorium. These are called non-eligible debts. Examples of non-eligible debts include:[14]

• student loans

• business debts

• child maintenance

• the principle sum owed under a mortgage

For a debt to be included it must be a liquidated sum. A liquidated sum means a defined amount of money payable immediately or on a certain date in future. An order for costs to be assessed at a future time is not a liquidated sum and cannot be included in the moratorium.[15]

A creditor cannot take any enforcement action in respect of a moratorium debt while the moratorium is in place.[16] Enforcement action includes starting any action or legal proceedings against a debtor relating to non-payment of a moratorium debt.[17]

Interest and charges on moratorium debts are frozen during the moratorium period.[18]

When protections start

A debt adviser enters details of the debt into a register maintained by the Insolvency Service. The Insolvency Service sends creditors a notification of the qualifying debts and the start date of the moratorium.

The moratorium starts the day after the adviser puts the debtor's details on the register. In practice, most debtors have their details entered into the register on the same day, so the moratorium protections start on the following day.[19]

Mortgage arrears

Lenders must not:

• demand the payment of mortgage arrears included in the moratorium

• charge interest on the arrears

Mortgage lenders can still charge interest on the mortgage principal. The mortgage principal is the outstanding amount minus the arrears.

Possession proceedings for rent or mortgage arrears

Once the moratorium begins, a landlord or lender cannot:

• give an occupier notice to leave due to arrears

• issue a possession claim for arrears

• apply for a warrant to evict an occupier for arrears

A landlord or lender can take steps to evict an occupier for reasons other than arrears. For example, a landlord can start a possession claim on antisocial behaviour grounds.

Find out more about moratoriums and possession proceedings.

Existing court proceedings

A court or tribunal must take all necessary steps to ensure that any action or proceeding to enforce a court order or judgment concerning a moratorium debt does not progress during the moratorium period.[20]

Joint debtors

A creditor cannot take any enforcement action against a joint debtor while the moratorium is in place.[21]

Guarantors

Guarantor loans can be included in a moratorium, but the protections do not extend to the guarantor.[22]

Creditor contact and harassment

A creditor or their agent must not contact a debtor regarding the enforcement of a moratorium debt.[23] A creditor might be harassing a debtor if they contact them regarding enforcement.

Creditors can give notices and statements about the arrears if required under the Consumer Credit Act 1974 or Financial Conduct Authority Handbook rules.

A debtor can complain to the Financial Ombudsman about creditors who are authorised by the Financial Conduct Authority.

Find out more about making a complaint about a lender on Shelter Legal.

The debtor remains liable for moratorium debts during and after the moratorium period.

The law covering mental health crisis moratoriums does not state that the debtor is obliged to pay for ongoing liabilities during the moratorium. A debt advice provider cannot use a debtor's failure to pay for ongoing liabilities as a ground to cancel a moratorium.

The debtor should continue making payments if they can. For example, mortgage or rent payments. This is because the moratorium will not cover any new debts that accrue during the moratorium.

Creditors can continue to accept payments for moratorium debts during the moratorium period.

Suspended possession order for rent arrears or mortgage arrears

Rent arrears or mortgage arrears, and costs under a suspended possession order (SPO) are qualifying debts for a mental health crisis moratorium. A landlord or lender cannot force a debtor to make payments.

The debtor can continue to make payments under an SPO during a moratorium period.

It will be a breach of the SPO terms if the debtor chooses not to make payments under an SPO. The landlord or lender can apply for a warrant to enforce the possession order after the moratorium ends.[24]

The debt advice provider must cancel a mental health crisis moratorium if:[25]

• they consider the evidence from an AMHP contains inaccurate, misleading, or fraudulent information

• the debtor requests that the debt adviser cancels the moratorium

The debt advice provider is not required to cancel a mental health crisis moratorium if the debtor's personal circumstances would make the cancellation unfair or unreasonable unless the debtor has requested to cancel.[26]

The debt advice provider must contact the debtor's nominated point of contact 20 to 30 days after the moratorium starts to confirm that the debtor is still receiving mental health crisis treatment. The advice provider must continue to do this every 20 to 30 days.[27]

The debt advice provider must end the mental health crisis moratorium if a nominated point of contact in does not confirm that the debtor is still receiving mental health crisis treatment.[28]

Creditor requests a review

A creditor who receives notification of a moratorium can request a review of the moratorium on the grounds that either:[29]

• the moratorium unfairly prejudices the interest of the creditor

• there has been material irregularity

There is material irregularity if:[30]

• the debtor did not meet the eligibility criteria for a mental health crisis moratorium

• a debt included in the moratorium is not a qualifying debt

• the debtor has sufficient funds to pay their debts as they fall due

A creditor must request a review within 20 days from the start of the moratorium. If the moratorium includes a debt that was added at a later date, the creditor must request a review within 20 days from when this takes effect.[31]

The creditor must make their review request in writing, state the review grounds and provide evidence.[32]

The debt advice provider must conduct a review and inform the creditor of the outcome within 35 days after the moratorium started.[33] The provider can cancel the moratorium if they agree there are sufficient grounds.

The debt advice provider can decide not to cancel the moratorium if the debtor's personal circumstances would make cancellation unfair or unreasonable.[34]

Creditor applies to court

The creditor can apply to court to request cancellation of a moratorium if the debt advice provider decides not to cancel following the review. The creditor can apply on the grounds that either:[35]

• the moratorium unfairly prejudices the interests of the creditor

• there has been material irregularity

There are costs risks for the debtor and the debt advice provider if the creditor makes an application to court.

After the moratorium ends, all debts are still owed. This includes debts covered by the moratorium and any new debts that became due during the moratorium.

Once creditors are aware that the moratorium has ended they can take steps to enforce their debts and can resume or start legal proceedings. They can apply interest, fees, penalties, and charges from the end of the moratorium.[36]

Creditors cannot ask the debtor to pay interest, fees, penalties, and charges that would have accrued during a moratorium unless a court has ordered this.[37]

Find out more about where to get debt and money advice.

Professionals who deal with debt cases on behalf of clients can get advice from Shelter's Specialist Debt Advice Service.