Responsibility and obligations during moratorium on payments
Information on Responsibility and obligations during moratorium on payments
Your duties
While debt mitigation is being sought, the debtor shall:
set aside any income in excess of living expenses, cf. the calculated repayment capacity specified in the decision approving the application. If, for any reason, the basis of the calculation changes, e.g. income or expenditure, the repayment capacity shall be adjusted to reflect the changed circumstances and the supervisor shall be notified.
terminate lease agreements and other contracts for future expenditure that are not connected with goods and services necessary for his or her subsistence or that of his or her household, or for normal housekeeping
not hand over, sell, give away or pledge any valuables or assets that could be used as payment to creditors
not incur new debts or take other measures that could harm the interests of creditors, unless the obligation incurred is necessary to provide for the debtor and their family
A breach of obligations during the payment moratorium may result in the debt adjustment proceedings being terminated.
Expenses relating to the day-to-day running of the household. The Debtors' Ombudsman's living expense guidelines should be used as a reference for what constitutes a reasonable cost relative to family size (the guidelines are published on the Ombudsman's website, www.ums.is)
Accruing rent payments.
Costs related to the running of the home, such as claims for property taxes, the building's maintenance fund, insurance, heating and telephone costs. Older arrears should not be paid; only claims falling due during the payment moratorium should be paid.
All public levies and child maintenance. Older arrears must not be paid; only claims that fall due during the payment moratorium.
Claims arising during the payment moratorium in respect of living costs and essential expenses, e.g. dental costs and nursery fees. Claims that are already overdue when the payment moratorium begins shall not be paid.
Payment protection does not cover claims that arise after an application for debt adjustment has been approved.
Loan repayments, e.g. mortgages, car loans or student loans
Car finance agreement repayments
Child maintenance payment that fell due before the payment shelter began
Overdraft debt incurred before the payment shelter began
Credit cars bill that fell due before the payment moratorium began
Tax debts that had fallen due before the payment moratorium began
The Office encourages debtors to contact their supervisor if they are unsure about what should be paid during the payment moratorium.
Demand or receive payment of their claim.
Accelerate debts based on contractual provisions.
Initiate attachment, freezing, or other legal enforcement against the debtor’s assets, or have the debtor’s assets sold by forced sale.
Petition for the debtor’s estate to be placed into bankruptcy proceedings.
Demand payment from guarantors or take any other measures to collect the claim.
Collect claims from a third-party collateral provider.
Refuse to provide goods or services that the debtor needs for their basic living expenses, against immediate payment (for a claim incurred during the payment protection period) or adequate security, on the grounds of previous defaults.
The appointed supervisor provides detailed information and guidance regarding the rights and obligations that apply during the payment protection period.
Moratorium of payments means that:
Accounts with an overdraft facility will be closed.
Credit cards with available credit will be closed.
Direct debits/automatic payments will be cancelled.
Instalment payments on credit cards will become due in full.
Payment services will be suspended.
Treatment of claims during a payment moratorium
Creditors are entitled to charge standard interest on their claims.
Creditors are not permitted to charge default interest, late-payment fees, or other collection costs during the payment protection period, regardless of the outcome of the process.
In the case of secured loans, the agreement specifies how accumulated unpaid instalments during the payment protection period will be handled. If the debt mitigation process ends without an agreement, unpaid instalments on secured loans that accrued during the payment protection period will be collected.
If the debtor fails to fulfil their obligations during a payment moratorium, for example by setting aside funds. the supervisor may request that the UMS revoke the debtor´s authorisation to seek debt moratorium.
Set aside from your income anything that exceeds essential living expenses.
Do not dispose of, sell, gift, or pledge any valuables or assets that could be used to pay creditors.
Do not make payments on debts that are covered by the debt mitigation, for example:
instalments on loans such as mortgages, car loans, and student loans,
instalments under vehicle (car) agreements/leases,
payments toward child-support arrears.
You must pay bills related to the household’s day-to-day running.
You must pay all accruing public charges/taxes and ongoing child support.
You must pay claims that arise during the payment moratorium.
Duties of the creditor
The creditor may not accept or demand payment of their claims.
The creditor must not use general collection measures.
A payment moratorium entails that:
bank accounts with an overdraft facility will be closed,
credit cards with a credit limit will be closed,
direct debits will be cancelled,
credit-card instalment plans will be accelerated (become immediately due),
payment services will be closed.
An appointed case administrator will provide detailed guidance on your rights and obligations during the payment moratorium.
