Credit Management issue April 2021

NEWS SPECIAL
HOW DOES IT WORK?
Under the scheme, breathing space
can only be started by an authorised
debt advice provider. Authorised
debt advisors will administer the
breathing space and will be the point
of contact for the debtors, creditors and
the creditors’ appointed agents. The
Insolvency Service will maintain the
electronic service that will be used to
keep a register of the breathing space
and will send notifications to creditors.
The register is not open to the public
(unlike the bankruptcy and insolvency
register).
The moratorium on taking action and
applying fees, penalties and interest
on breathing space debts can come
at any stage of a recovery action.
Once authorised by the debt advisor,
the breathing space will start the day
after the details are recorded on the
register. At this time creditors (and/or
their agents) will be notified either by
electronic communication or post.
The onus is then on the creditor
or their agent to ensure that the
protections are observed throughout
the breathing space. If at this time
additional debts are located other than
those subject to the breathing space, the
creditor must notify the Debt Advisor.
Where a court or tribunal is already
involved, this will include sending them
written notification so that appropriate
measures can be implemented. A court
or tribunal that receives notification of
the breathing space after a bankruptcy
petition has been started must stay
those proceedings until the end of the
breathing space. Other proceedings
about the debt (other than the
enforcement of court judgments or
orders) can continue until the court or
tribunal makes an order or judgment.
There are certain debts including
mortgages, rent, taxes and utilities
that are classed as ongoing liabilities.
The guidance says that the debtor is
required to pay these where they can,
except for any arrears that are captured
within the breathing space. If these
ongoing debts are not paid, and where
the debt advisor thinks it is fair and
reasonable, there is a possibility that
the breathing space will be cancelled.
However, this does not appear to include
a mental health crisis breathing space.
During a standard breathing space
(i.e. not including a mental health crisis
breathing space) the debt advisor must
carry out a midway review to make
sure the debtor is complying with their
obligations no later than 35 days into
the breathing space.
It is worth noting that, in appropriate
circumstances, which include a creditor
being unfairly prejudiced by the
moratorium, the creditor can request
a review from the debt advisor or, if
necessary, from the court. The initial
request for a review must be made
within 20 days and should be supported
by evidence. The creditor can also apply
for permission from the court to take
enforcement action where prevented
from doing so by the moratorium.
IMPACT ON CREDITORS
There is much to think about for
creditors affected by the regulations.
The regulations are comprehensive, and
it is important that affected creditors
understand them. There is great deal
to prepare so that robust measures are
implemented to ensure compliance.
This is going to include
understanding which debts are eligible
and recording details of the breathing
space so that appropriate controls are in
place and debts are not inappropriately
pursued. Creditors should set up
processes to ensure all incoming
breathing space notifications (whether
electronic or by post) are recorded
without delay.
Effective communication between
creditors, agents and the court will be
crucial to ensure that unnecessary and
unrecoverable costs are not incurred. If
creditors fail to apply breathing space
protections, any action taken will
be void and they may become liable
for the debtor’s costs. The impact on
creditors will depend on the nature of
their business and their ability to absorb
delays in receiving payment.
Although there will no doubt be
some challenges with implementation,
this further encouragement for
individuals struggling with debt to seek
help from the money advice sector is a
positive step.
We are working with creditors to
put in place procedures to effectively
comply with the regulations and to
maximise prospects of making fair and
ethical recoveries.
Clarke Willmott is a national law
firm with offices in Birmingham,
Bristol, Cardiff, London, Manchester,
Southampton and Taunton. It has an
industry leading team of debt recovery
lawyers. Operating for over 25 years, the
team acts for organisations of all sizes.
www.clarkewillmott.com
Philip Roberts FCICM, Partner at Clarke
Willmott LLP is a member of the CICM
Think Tank.
>NEWS
IN BRIEF
Meritorious Service
THE Executive Board of Trustees
unanimously agreed at its recent
meeting, to award the 2021 Meritorious
Service Award to Jane Abramson
MCICM and Kim Delaney-Bowen
MCICM. Congratulations to Jane and
Kim, true unsung heroes for their
service to the Institute and the wider
credit community. The formal award
presentations will take place later
this year, and will be covered in CM
magazine.
Turner Lecture
THE famous Turner Lecture, organised
by the Kent Branch, will go ahead later
in the year, despite the challenges of
COVID. Strongly supported by CICM
CEO Sue Chapple, and sponsorship
from the HCEO Association, Global
Recoveries, Henderson Chambers
and T G Baynes, the event will
include speakers from the world
of debt collection, insolvency, and
enforcement. It is hoped that Professor
Turner, former CICM President, will
be there in person, assuming it is safe
to do so. A date has been pencilled in
for 3 December, but early booking is
encouraged. For more details, contact
Becki.Sharpe@cicm.com
Open Borders Direct
CICM has agreed a three-month
Helpline access for any member who
is struggling to make heads or tails
of the paperwork or processes in
importing or exporting. It is hosted on
www.openborders.direct and under
the ‘SuperSearch’ where members will
be guided by an AI Robot. Further help
is available through an ‘Ask an Expert’
feature – free of charge – providing
direct access to a team of Open
Borders Direct experts.
Lesley Batchelor, the brains behind
the new platform, says the intention is
to solve any international trade related
problem: “When you ‘Ask an Expert’
we’ll ask you some pre-set questions
about the Harmonised Tariff Code and
any forms that are part of the problem
to help OBD to provide a speedy
response. The team at Open Borders
Direct are committed to finding an
answer for you; all you have to do is
sign up using the Trade Association
dropdown to take advantage of your 3
months free subscription – no credit
card details are needed to access this
offer.”
Advancing the credit profession / www.cicm.com / April 2021 / PAGE 9