In Law, what is a Moratorium?

Felicia Dye

A moratorium suspends an activity. This term is often used in the legal sense to refer to an obligation or experience that a party has a right to be relieved of. Moratoriums are used in numerous situations, including those that involve the repayment of debt.

When large numbers of people go into foreclosure, laws may be passed to force a foreclosure moratorium.
When large numbers of people go into foreclosure, laws may be passed to force a foreclosure moratorium.

Legal obligations are a common part of a functioning society. However, there are some instances when parties with the authority to do so decide it is best to relieve people of certain obligations. The term moratorium is commonly used in situations when the suspension of activity is not permanent. In many cases, the suspension ends upon the arrival of a certain date, at the commencement of a certain event, or upon the fulfillment of a certain set of circumstances.

Many definitions refer to moratoriums as the voluntary suspension of activities. However, this definition is inaccurate. The economic crisis that hit the United States (US) in 2008 provides a prime example.

Massive numbers of people experienced foreclosure. As governments struggled to develop solutions, politicians began proposing laws to force a foreclosure moratorium. California is one state that successfully passed a law that temporarily prevented some foreclosures from taking place.

Bankruptcy is another example of a moratorium which is not voluntary. When a person has an active bankruptcy case, there is a moratorium on debt collection efforts by creditors. This is not because all creditors naturally stop trying to collect money from bankrupt individuals. Rather, the suspension of collection efforts results because the law prohibits it.

Moratoriums can be for exploratory purposes. This may be seen when there is a great deal of controversy regarding a particular issue. Until conclusions can be drawn or solutions can be reached, officials may find it necessary to relieve those affected by the policy from the obligation of adhering to it.

In some cases, moratoriums may not be for the benefit of the public. Suspension of certain activities may be for the benefit of authorities. Countries that host international sporting events commonly debate the moratorium of certain criminal offenses.

Prior to the 2010 World Cup soccer events in South Africa, there were advocates for a moratorium on prostitution. Supporters of this move argued that police should be focused on more serious crimes. There were also concerns about courts being overwhelmed with these matters, which many people considered trivial. In such an instance, if a moratorium was granted, authorities would be stripped of their powers to take action against prostitution. It should be noted, however, that the law against prostitution would still technically exist though it were on hold.

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