Proposed ‘breathing space’ for debtors
Many insolvency professionals are predicting a rise in personal debtors around the end of 2020, triggered by personal debt pertaining to business failure. The Government’s current aim is to launch a new debt respite scheme (due to launch on 4 May 2021) in the hope that this will go some way to minimising the number of personal insolvencies in the future.
The Government has recently published a draft Statutory Instrument which will provide for a 60-day “breathing space” during which eligible indebted individuals will be protected from accruing interest, fees/charges and enforcement action from creditors whilst receiving professional debt advice to find a long-term solution to their financial difficulties.
As currently proposed, the definition of a “qualifying debt” includes any amount which the debtor is liable to pay under or in relation to (i) an order or warrant for possession of the debtor’s place of residence or business; (ii) a court judgement; (iii) a controlled goods agreement; and any debt owed or liability payable to the Crown.
A link to the draft Statutory Instrument, snappily entitled The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 can be found here.
The objective behind the proposals is to incentivise more people in problem debt to access professional debt advice and to do so without delay. As with any problem, the key is to seek professional advice at an early stage when the options available are often far more extensive. If you have concerns about your financial position, please do not hesitate to contact the Barker Gotelee Insolvency & Business Recovery Team for an informal chat.
Sarah Mower specialises in business insolvency and restructuring within the Business Services department at Barker Gotelee Solicitors in Ipswich.