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Timing of a breathing space moratorium

Sarah Mills and Chris Sykes of Shelter’s Specialist Debt Advice Service answer your questions about the timing of a breathing space moratorium.

Published August 2023

Read part 1 of the breathing space and possession proceedings Q&A which covers possession hearings, orders and notifying the landlord and the court on Shelter Legal.

References to legislation in this article are to the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (DRS Regs).

My client is due to be evicted tomorrow – can breathing space stop it from going ahead?

Chris says:

The Debt Respite Scheme Regulations set out three separate steps.

  1. A breathing space moratorium application is made.

  2. The Insolvency Service must make an entry on the register – and the deadline for doing so is by the end of the following business day as per regulation 25(2)(a).

  3. A breathing space moratorium starts on the day following an entry being made on the register as per regulation 26(1).

In Lees v Kaye [2022] EWHC 1151 (QB), the judge commented:

“save for the loading of information onto the system by the debt advisor there is no physical or mental activity required by anyone; the whole process thereafter, including the generation of notices and emails, is automated."

Read a case summary of Lees v Kaye on Shelter Legal.

We have also heard from advisers that the process seems to be completely automated. 

If your client is due to be evicted tomorrow then it is certainly worth them making a breathing space application the day before. There is a strong chance that the moratorium will commence on the following day.

Where possible, a client should seek debt advice as soon they can to meet the deadlines within the regulations.

When will my client be protected from eviction if arrears are added late?

Chris says:

When an additional debt is added to a moratorium, the debt advice provider updates the breathing space moratorium to include the additional debt, and then the Insolvency Service must provide a notice to the creditor by the end of the following business day as per regulation 15(5).

The moratorium protections will begin from whichever is the earliest, when the creditor either:

  • receives a notification of the moratorium

  • is deemed to receive the notification under regulation 37(4)

The timeframes under regulation 37(4) differ depending on how the notice was served. The notification will be deemed to have been received:

  • the day that the email was sent

  • the day the notification was hand delivered to the creditor’s address

  • four business days beginning with the day the notification was posted

Under regulation 23(5) information on the creditor must be provided in the application. If your client has an email address for their landlord or letting agent then this should be provided to the debt advice provider to ensure the notification is deemed to have been received as soon as possible.

If there is only a postal address for the landlord then the breathing space moratorium protections might not be in place until four business days later.

When is the best time for a client facing eviction to ask for a breathing space?

Sarah says:

This will depend on the client’s situation.

If a possession claim has not yet been issued, the client might want to enter a breathing space before this happens. This would be particularly useful for a client who needs to reduce their arrears so the mandatory rent arrears ground 8 cannot be used.

This could also be beneficial if the client is able to make an affordable offer of repayment but needs some time before they can do this. If a possession claim is issued after the moratorium, the client could then be in a position to request a suspended possession order on terms.

If the client is being evicted under ground 8 and they have no prospect of reducing the arrears before the possession hearing, it might be better to wait to enter a breathing space. This would maximise the time the client has in the property. Eviction can still be suspended by a breathing or mental health crisis moratorium after a possession order and warrant has been obtained. 

You should ensure that you allow enough time before the scheduled eviction for the moratorium protections to kick in. The moratorium protections usually start the day after the application is made but this could take up to two business days, as per regulation 26(1) and regulation 25(2)(a).

In the case of Kaye v Lees [2023] EWHC 758 (KB) the High Court considered the intent of the Debt Respite Scheme Regulations.

The court held that whether a debtor is using a moratorium to find an appropriate debt solution is relevant, when a debt advice provider is deciding if a moratorium is appropriate. The court also mentioned that a debt advice provider could even face a judicial review claim in this regard. This is something that advisers should be mindful of when they are delaying entering clients into moratoriums for the sole purpose of preventing eviction. 

Read a case summary of Kaye v Lees (3) on Shelter Legal.

My client had a breathing space moratorium last year, how soon can they get another one?

Chris says:

In order to make a further breathing space application, the previous breathing space moratorium must have ended more than 12 months before the date of the application as per regulation 24(3)(g). 

For example, if the breathing space moratorium ended on 1 June 2022 then the earliest that a new application can be made is on 2 June 2023.

Can my client and their partner have a breathing space one after another?

Chris says:

When a client enters a breathing space moratorium then the creditor will be unable to enforce the debt. This protection also extends to anyone who is joint and severally liable for the debt as per regulation 7(7)(n).

There is nothing to prevent clients from using a breathing space moratorium tactically.

Clients should be aware that under regulation 17(1) a creditor has the right to request a review of a moratorium if it unfairly prejudices their interests, and if they are not satisfied by the outcome of the review then they can make an application to court under regulation 19(1) to ask for the court to cancel the moratorium on these grounds.

In the county court case of West One Loan v Salih, four brothers were joint and severally liable for a secured loan of over four million pounds. One brother commenced a breathing space moratorium, and when that ended a second brother commenced a separate moratorium. The creditor applied to court to cancel the moratorium on the grounds that joint debtors applying for consecutive moratoriums was causing them unfair prejudice.

By the time the hearing took place the second moratorium had come to an end, but the court agreed with the argument and granted an injunction to prevent any further members of the Salih family from applying for a moratorium.

The judge commented:

"the discretion… is wide enough to enable [a breathing space moratorium] to be cancelled where joint creditors apply for successive moratoria in order to avoid paying their debts rather than to explore a debt solution."

Read a case summary of West One Loan v Salih on Shelter Legal.

The case of Kaye v Lees [2023] EWHC 758 (KB) was a high court decision, which also held that a moratorium should be used to find a debt solution.  Couples using consecutive moratoriums in order to extend protections should be aware that creditors may raise these arguments in a request for a review. 

Where couples are considering this tactic, then there should be some evidence of the progress made by each client to reach a debt advice solution. This will help to avoid any allegations of an abuse of process.

Further resources

Shelter Legal

Breathing space and mental health crisis moratoriums – different types of moratorium and their effects on possession action

Guide to breathing space for tenants in arrears – an easy-access guide to the effect of a moratorium on possession proceedings from notice to eviction

Debt case law summaries – contains a breathing space section with key cases, including Lees v Kaye mentioned in this article

About the authors

Sarah Mills and Chris Sykes work for Shelter's Specialist Debt Advice Service, answering complex queries from professionals about debt cases.