We were recently instructed on behalf of a client who had entered into a Mental Health Crisis Moratorium to defend an action by a debtor who was continuing proceedings, notwithstanding the moratorium. The court found in our client’s favour, however in doing so highlighted that it had considered the very detailed and extensive medical evidence that had been provided in support, echoing the recent case law in this area.
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 was launched on 4 May 2021. The Regulations created two breathing space moratoriums both of which prevent creditors from taking enforcement action against debtors who are not able to pay. Debts which are caught by the Regulations include any sums due pursuant to court orders, as well as preventing landlords and mortgage lenders from taking enforcement action.
Enforcement action includes starting any action or legal proceedings against a debtor relating to or in consequence of non-payment of a moratorium debt and also includes execution of a warrant of possession. Further, the moratorium freezes interest and charges on moratorium debts during the moratorium period.
Pursuant to Regulation 26, a breathing space moratorium “continues for 60 days beginning with the date on which it started”, unless it ends earlier in accordance with the rest of the Regulations.
Part 3 of the Regulations creates a Mental Health Crisis Moratorium, the duration of which is on-going subject to the debtor receiving continuing care. In order to enter into a Mental Health Crisis Moratorium, the debt advice provider must be satisfied that a Mental Health Crisis Moratorium would be appropriate and crucially, that an approved mental health professional has provided evidence that the debtor is receiving mental health crisis treatment. The debt advisor then has an ongoing duty to make requests for updated confirmation of ongoing treatment throughout the moratorium, via a nominated medial contact.
Can I challenge a Mental Health Crisis Moratorium?
However, there are avenues available for challenging a Mental Health Crisis Moratorium, should it be deemed appropriate or necessary.
Under regulation 17(1), a creditor has the right to request a review of a moratorium if it unfairly prejudices their interests. The request should be made to the debt provider, who will look at the medical evidence provided in support of the moratorium application and may seek an update from the debtor’s nominated medical contact. If they are not satisfied, they may bring the moratorium to an end.
If a creditor is 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 the same grounds as under Regulation 17(1).
It should be noted that any request for the above reviews are subject to very tight timelines, so any challenge should be made urgently.
In Kaye v Lees (2023) EWHC 152 (KB), the court held that Lees was not entitled to enter into a further Mental Health Crisis Moratorium as Lees did not meet the eligibility criteria for a moratorium and as such failed due to a material irregularity under regulation 17(2)(a).
The only evidence of Lees’ illness and treatment was correspondence from two professionals and the court was not satisfied that Lees was “receiving any other crisis, emergency or acute care or treatment in hospital or in the community.”
In Guy and others v Brake and others  EWHC 1560 (Ch), the court held that the question of whether the debtor should be in a Mental Health Crisis Moratorium, is an objective question of fact for the court. This objective test justified disclosure of documents that support or adversely affect the application to cancel Mrs Brake’s moratorium and it was in the interests of justice that Mrs Brake submit to a medical assessment.
Taking the above in to consideration, creditors should not just take the advisors opinion but should in fact seek confirmation that the test is being applied adequately and that the specific requirements of the Mental Health Crisis Moratorium are being met. If an application is made to ask the court to cancel the moratorium, consider requesting independent medical opinion. Furthermore creditors should be mindful of the time limits for challenges, especially where a debtor has exited and entered into a new moratorium.