Hold that enforcement…..

There really isn’t much point in litigating to recover debts if you’re not going to be able to get any money at the end of the day. It’s always been important to consider the financial position of the proposed defendant before leaping off to take legal action, but there is now something new to consider – at least in the short term – if you succeed in getting judgment.

The government has just (on 4th May) launched its new scheme to give people who are struggling with debt a breathing space to sort themselves out. You will need to consider this in any question where you are asked to advise on recovery.

The scheme is called Breathing Space this gives debtor legal protection from their creditors for 60 days. The government is expecting 700,000 people to access the scheme in its first year. The scheme is accessed in two ways:

By contacting a professional debt advisor.
Via a mental health professional dealing with crisis treatment – that professional can refer a patient to a professional debt advisor for that advisor to determine the patient’s eligibility for the scheme.

Once someone enters the scheme their debts are frozen and interest and other charges do not continue to accrue. The scheme covers most debts including credit and store cards, personal and payday loans, bank overdrafts, rent and mortgage arrears and government debts including for unpaid tax and for the refund of overpaid Universal Credit debts. Judgment debts will also be covered.

During the standard 60 day period those in the scheme will have debt advisor support to design a plan to get back on track. The scheme period will be extended for those in mental health crisis and will extend throughout their treatment and for 30 days afterwards.

You should note that this is not a payment holiday and during the duration of the scheme those involved will need to keep paying for ongoing liabilities. If they fail to do that the scheme can be cancelled.

The Insolvency service will keep records on this and will send notifications to creditors about the Breathing Space.