Breathing space debt moratorium and possession proceedings

Breathing space and mental health crisis moratoriums prevent landlords and lenders from taking possession due to rent or mortgage arrears.

This content applies to England & Wales

What is a breathing space?

A breathing space prevents creditors, including landlords and mortgage lenders, from taking action against debtors who are not able to pay.

This respite period is called a moratorium and lasts up to 60 days.[1]

A debtor remains liable for moratorium debts and has to make other payments that fall due in the meantime.

Debts eligible for including in the moratorium are:[2]

  • rent and mortgage arrears

  • consumer credit agreements such as loans and credit cards

  • utility and fuel arrears

  • benefit overpayments

  • council tax arrears

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.[3]

There is no limit on the number or sum of the debts included in the breathing space moratorium. For a debt to be included it must be a liquidated sum. An order for costs to be assessed at a future time could not be included in the moratorium.[4]

Some debts cannot be included in the moratorium, for example, student loans, business debts, and child maintenance.[5]

To qualify for a moratorium, an individual must demonstrate that they:[6]

  • owe a qualifying debt to a creditor

  • usually reside in England or Wales

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

  • have not had a breathing space moratorium in the last 12 months

Guidance for creditors and money advisers is available from the government.

What is a mental health crisis breathing space?

A mental health crisis moratorium is available to people who are receiving treatment from a specialist mental health service in relation to a serious mental disorder.[7]

It lasts as long as the person's specialist mental health treatment, plus 30 days.[8]

The conditions for a mental health crisis moratorium are the same as for the standard breathing space moratorium, except there is no limit to how many times a debtor can enter a mental health crisis moratorium.[9]

The respite can start following an application from a debtor themselves or their representatives, carers, or social workers.[10]

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

Who can offer a breathing space?

Both types of moratorium require a debtor to get debt advice from either:[11]

  • a local authority

  • a debt adviser authorised by the Financial Conduct Authority

Before starting a breathing space moratorium, a debt advice provider checks that:[12]

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

  • a breathing space moratorium would be appropriate

A debt advice provider enters details of the debt and the creditor to 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.

Rent arrears

Landlords must not:[13]

  • demand payment of rent arrears included in the moratorium

  • charge interest on rent arrears during the breathing space

Permitted contact

Landlords can contact tenants regarding other matters, including access for repairs, current rent, permitted legal proceedings, complaints or queries raised by the tenant. [14]

Landlord notices

Landlords cannot serve notice on an assured tenant on rent arrears grounds.[15]

Landlords can serve notice:

  • for reasons not related to rent arrears

  • under section 21

Landlords also cannot serve other notices for rent arrears, for example on introductory, secure or regulated tenants. This is a prohibited step to collect a moratorium debt.[16]

Where there is no requirement for the notice to give grounds for possession, landlords can serve notices during the moratorium but must not contact debtors about rent arrears included in the moratorium.

Mortgage arrears

Lenders must not:[17]

  • 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.

Permitted contact

Lenders can give notices and statements regarding the arrears if required to do so under the Consumer Credit Act 1974 or Financial Conduct Authority Handbook rules.[18]

Possession proceedings

Tenants and mortgage borrowers are protected from possession claims based on arrears included in the moratorium. Debtors are also protected from enforcement of an order for sale based on a charging order.[19]

Landlords and lenders must not:[20]

  • serve a notice in respect of tenancy

  • bring a possession claim against a debtor relating to a moratorium debt

  • take steps to enforce a possession order regarding a moratorium debt

If the deadline to bring an action including possession proceedings falls during the moratorium, the time limit is extended by 8 weeks from the end of the moratorium.[21]

On-going court proceedings

Landlords and lenders must notify the court if court proceedings are underway when a breathing space starts.[22] Any action they take against debtors contrary to the breathing space rules are void.[23]

The court must ensure that any proceedings to enforce an order concerning a moratorium debt do not progress during the moratorium period.[24] This includes carrying out an eviction.

The court can enter a judgment or order in conclusion of a possession claim during the moratorium.[25]

Proceedings include:[26]

  • holding a hearing

  • making or serving a warrant or writ

  • instructing an enforcement agent to serve an order, warrant or judgment summons

Breathing space moratorium

If the proceedings are against a debtor in a standard breathing space, the court must adjourn until the next available date after the breathing space ends.[27]

Mental health crisis moratorium

If proceedings are against a debtor in a mental health breathing space the court must adjourn the matter generally with a review for directions six months after the moratorium start date.[28]

Permitted proceedings

Courts can send notices or correspondence to a debtor in relation to an action or proceeding.[29]

Courts may grant permission to continue legal proceedings if they consider it reasonable and not detrimental to the debtor.[30]

Eviction during the moratorium

The tenant or borrower must not be evicted on the basis of a moratorium debt during a breathing space or mental health crisis moratorium.[31]

The landlord or lender must notify the court if an eviction is due to take place.[32] The defendant or their representative could also contact the court, to make sure it is aware of the moratorium.

A tenant or borrower who is evicted for a moratorium debt while they are under the moratorium protections can apply to court for a warrant of restitution to be granted access to their home.[33] They could also be entitled to claim damages.

Debts after the breathing space ends

After the moratorium ends, all debts are still owed, including those that were covered by the moratorium and any new debts that became due during the respite time.

Specialist debt advice support with debt cases

Shelter's Specialist Debt Advice Service provides advice to debt professionals in England and Wales, including:

  • Local Citizens Advice

  • local authorities

  • housing associations

  • all other free to client advice agencies

If you are dealing with a tricky debt case and need help to find an answer, or you want a second opinion, call the helpline on 03300 580 404 or submit an online enquiry using the webform.

This service can't advise members of the public. Use Money Helper to find a debt adviser.

Last updated: 19 May 2022

Footnotes

  • [1]

    reg 26(2) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [2]

    reg 5 The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [3]

    reg 15(7) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [4]

    Axnoller Events Ltd v Brake and another; Brake and others v Chedington Court Estate Ltd [2021] EWHC 2362 (Ch).

  • [5]

    reg 5 The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [6]

    reg 24(3) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [7]

    reg 28 The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [8]

    reg 32(2) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [9]

    reg 30(2) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [10]

    reg 29(1) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [11]

    reg 3, 23, and 29 The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [12]

    reg 24(4) and 30(4) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [13]

    reg 7(6)-(7) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [14]

    reg 11 The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [15]

    reg 7(7)(j) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [16]

    no explicit provision exists in relation to these types of tenancies, but serving a notice on arrears grounds would be a step to collect a moratorium debt, prohibited by reg 7(7)(a) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [17]

    reg 7(6)-(7) and 7(9) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [18]

    reg 11(2)(b)(v) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [19]

    Lees v Kaye [2022] EWHC 1511 (QB).

  • [20]

    reg 7(6)-(7) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [21]

    reg 8(2) and 9(2) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [22]

    reg 10(1) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311; Practice Direction 70B Civil Procedure Rules

  • [23]

    reg 7(12) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [24]

    reg 10(5) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [25]

    reg10(3) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311.

  • [26]

    reg 10(6) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [27]

    para 3.3 Practice Direction 70B Civil Procedure Rules

  • [28]

    Paras 3.4 & 3.5 Practice Direction 70B Civil Procedure Rules

  • [29]

    reg 10(7) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [30]

    reg 7(5) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311

  • [31]

    reg 10(5) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311.

  • [32]

    reg 10(1) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2021/1311.

  • [33]

    Lees v Kaye [2022] EWHC 1151 (QB).