(1)
A moratorium commences on the effective date for a debt relief order in relation to each qualifying debt specified in the order (“a specified qualifying debt”).
(2)During the moratorium, the creditor to whom a specified qualifying debt is owed—
(a)has no remedy in respect of the debt, and
(b)may not—
(i)commence a creditor's petition in respect of the debt, or
(ii)otherwise commence any action or other legal proceedings against the debtor for the debt,
except with the permission of the court and on such terms as the court may impose.
(3)If on the effective date a creditor to whom a specified qualifying debt is owed has any such petition, action or other proceeding as mentioned in subsection (2)(b) pending in any court, the court may—
(a)stay the proceedings on the petition, action or other proceedings (as the case may be), or
(b)allow them to continue on such terms as the court thinks fit.
(4)In subsection (2)(a) and (b) references to the debt include a reference to any interest, penalty or other sum that becomes payable in relation to that debt after the application date.
(5)Nothing in this section affects the right of a secured creditor of the debtor to enforce his security.
Cases considering section 251G 6
[2011] UKSC 60 · 14 December 2011Interprets
A moratorium commences on the effective date of the debt relief order for every specified qualifying debt (see para [10]).
The prohibition on a creditor having any remedy in respect of a specified qualifying debt includes recovery by deduction from current benefits. The deduction power cannot be exercised during the moratorium (see paras [12]; [22]–[23]; [34]).
[2011] EWCA Civ 813 · 15 July 2011Interprets
Establishes the moratorium applicable to specified qualifying debts during a debt relief order. (see paras [27]-[28], [74]-[85])
Defines when the moratorium commences in relation to each specified qualifying debt. (see para [27])
Interprets the moratorium restrictions by distinguishing remedies and proceedings in respect of the debt from possession proceedings whose object is recovery of the landlord’s property. (see paras [74]-[79], [95(5)])
Interprets no remedy in respect of the debt as not preventing an order for possession for rent arrears covered by a debt relief order. The result is the same for an outright and a suspended order. (see paras [74]-[79], [95(5)])
Confirms that the two forms of reference to the debt in subsection (2)(b) are read in their statutory context rather than as imposing materially different restrictions. (see para [76])
Confirms that a creditor’s petition is properly described as being in respect of the debt, whereas a bankruptcy petition is not described as being for a debt. (see para [76])
Interprets proceedings for the debt as materially equivalent in this context to a remedy in respect of the debt, so possession proceedings for arrears are not prohibited. (see paras [75]-[76])
Limits the stay power during the debt relief order moratorium. Possession claims by social landlords should normally proceed under the housing legislation. (see para [85])
[2010] EWCA Civ 1431 · 14 December 2010Interprets
The court treats section 251G as freezing specified qualifying debts during the moratorium and considers whether that restriction bars statutory deductions from continuing benefits. (see paras [17]-[18]; [75])
The majority interprets the prohibition on a creditor having a remedy in respect of a specified qualifying debt as including deduction at source from prescribed benefits during the moratorium. (see paras [63]-[65]; [75]; [96])
The judgment records the associated restriction on commencing proceedings for a specified debt without the court’s permission. The appeal was decided under the separate remedy prohibition in paragraph (a). (see para [18])
What each judgment says about section 251G is in the case-law panel in the full Act.