Are Moratoriums a ‘Free Ride’ for Defaulting Tenants and Debtors?



We’d love to be able to answer the question in the title with a simple ‘yes’ or ‘no’, however, as with most things in this new and uncertain age, there is rarely ever an easy answer to anything…


…so, let’s try and look at things with a bit of positivity.


After all, we could all do with some positivity right now.


Moratoriums granted by lenders and landlords, on rent arrears and a range of other debts, are expected to increase after the 4th May 2021, when the new Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 come into force.


But what will these new regulations mean? That debtors get away with it?


No.


The regulations are designed to do exactly what they say on the tin – give some breathing space…


…but only where breathing space is due.


These moratoriums aren’t going to be handed out like Get Out of Jail Free cards in a game of Monopoly gone mad, but are in fact, going to be much more difficult to get hold of.


Debtors will need to prove that pressing pause on their debt, as a moratorium effectively does, will enable them to get into a better position to be able to repay it eventually.


Getting back into a better position may look completely different from one person to the next, but a few examples could include someone beginning employment, someone managing to escape an abusive relationship, or someone seeking counselling or therapy to address their mental health issues.


All good things.


And after what will have been more than a year of lockdowns and bad news, good things should be given enough breathing space to be allowed to happen.


Now, there will still be strict guidelines that debtors have to stick to, in order for the moratorium to hold up, such as continuing with regular rent payments, but any enforcement, adding on of interest or even communication and correspondence over the already accrued debt must be halted completely until the agreed expiration of the moratorium.


So, there’s ends of the bargain to hold up for both sides.


Now, some landlords and lenders may be frustrated with this news, but we would remind them that these moratoriums will only go to the people who are able to prove that breathing space will genuinely allow them to get into a position to repay the debt, which really is good news for everyone.



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