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Moratoriums and creditor forbearance

A debt moratorium is a formally agreed period of time when you don’t have to make payments towards your debts while you seek help with your financial situation. Creditor forbearance is when creditors give you an informal, temporary period to deal with your debts, which may include pausing repayments, or freezing interest and charges.

If you’re struggling with your debts, it can be hard to deal with creditors contacting you or taking enforcement action. Fortunately, it’s often possible to ask your creditors to stop these actions for a period while you look for a debt solution.

You could contact a creditor to ask for this if you’ve spoken to us or received online debt advice

If you contact a creditor to explain that you’re in financial difficulties and you’re seeking help from a debt advice organisation, most companies will give you at least 30 days to deal with your debts.

This is an informal arrangement, and is different from the formal Breathing Space scheme.

During this time, they shouldn’t contact you, except for essential notifications about your account.

They’re more likely to offer you this help if you can show that you’re making an effort to sort out your debts.

When you’ve had your debt advice session with us, you’ll get a client reference number that you can share with your creditors.

The Debt Respite Scheme (Breathing Space) is the name of a formal government scheme that requires your creditors to give you 60 days in which to deal with your debts, free from contact and enforcement action, if you’ve had debt advice from an approved organisation such as StepChange.

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What is a moratorium?

A moratorium is a formal arrangement available in Scotland. It provides similar protections to creditor forbearance, but it’s a legal requirement on your creditors if you’re applying for one of the following debt solutions:

A moratorium protects you from actions by your creditors for six months. If you live in Scotland and you’re applying for one of the solutions above, we can help you to put a moratorium in place.

A moratorium is also available if you’ve applied for a debt relief order (DRO), which is available in England, Wales and Northern Ireland. The moratorium period for this is 12 months, and at the end of the period, all the debts in your DRO will be written off.

What is creditor forbearance?

This is when you ask your creditors to stop calling or writing to you while you deal with your debts. This is an informal agreement, but many creditors will agree to stop contacting you for a short period if you’ve sought debt advice.

This can give you time to help you focus on what to do next while you deal with your debt problems, without the worry of receiving calls from creditors demanding payments.

Most creditors will agree to stop contacting you for a short period if you need time to get in touch with a debt advisor or work out how you’re going to deal with your debts.

How do I ask my creditors for time to deal with my debts?

  1. Contact each of your creditors to let them know you’ve taken advice from a debt advice organisation. You can do this by letter or email, over the phone or in person
  2. Provide your creditors with some proof that you’re trying to sort out your debt problem. If you’ve contacted us by phone or used our online advice tool, you could give them the date you contacted us or the reference number we gave you. If you’re dealing with your debts on your own, explain what you’ve done so far and what you plan to do next
  3. If a creditor refuses to offer forbearance, and you feel this is unfair, you can make a complaint

Why do creditors provide forbearance?

Most creditors want to treat you fairly and help you deal with your debt problems. Giving you time to get independent debt advice is an important part of this and will usually make the creditor’s job easier.

On top of this, a requirement to offer forbearance is included in the industry codes of practice that cover almost all of the major UK lenders and debt collectors. These include:

If your creditor is a member of any of these organisations, they should give you forbearance if you tell them you’ve contacted us or another debt advice agency.

Other codes of practice may also include similar provisions to offer forbearance.

How long does this type of forbearance usually last for?

Forbearance usually lasts for 30 days but can be extended if a creditor thinks you need more time to deal with your debts. The 30-day period is meant to give you time to work out:

  • How you’ll deal with your debts
  • How much you’ll be offering to pay to your debts each month
  • Whether paying what you owe through a debt solution, such as a debt management plan, would be suited to your financial situation

Most creditors should also give you an extra 30 days if you let them know you need more time. Find out more about your rights when dealing with debt problems.

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Do all creditors offer forbearance?

Not all companies will offer forbearance to help you deal with your debts. Most large companies will be covered by the codes of practice above, but smaller lenders may not be.

The forbearance requirements apply mainly to consumer credit debt, such as bank accounts, credit and store cards, personal loans, catalogues and car finance, among others.

This help isn’t available with some types of debt, for example priority debts such as fines, court judgments or decrees, rent arrears, council tax arrears or child maintenance (CSA) arrears.

Will a moratorium or creditor forbearance affect my credit file?

If you’re given a period of forbearance to help you deal with your debt, any payment you miss may be recorded on your credit file. This could affect your chances of obtaining credit in the future.

The formal Breathing Space scheme doesn’t directly affect your credit score, but if you miss payments these will be recorded on your credit file as normal. Although Breathing Space isn’t recorded on your credit file, if a creditor knows you’ve had Breathing Space in the past, this may affect your ability to borrow from them in future.

A moratorium should not impact your credit file.

I’m dealing with mental health issues. What help can I get to deal with my debts?

If you’re struggling with mental health problems as well as dealing with your debts, you may be able to apply for a mental health crisis breathing space.

The first thing you should do is complete a debt and mental health evidence form. If you need to, ask a mental health practitioner to help you do this.

If you need forbearance from your creditors, it could be a sign that you’d benefit from impartial, expert debt advice. Use our online debt advice tool to get started.

"Get in touch with StepChange, you'll wish you'd done it sooner" Rob, Wiltshire