Draft SDRP Regulations published post-consultation

The Treasury published a draft of the Debt Respite Scheme (Statutory Debt Repayment Plan etc.) (England and Wales) Regulations 2022 for approval by Parliament and Senedd Cymru¹. The draft was laid under section 7(8)(a) and (b) of the Financial Guidance and Claims Act 2018 and requires a resolution of each House of Parliament and of Senedd Cymru¹. The regulations extend to England and Wales and apply to debtors domiciled in England and Wales or ordinarily resident in England or Wales¹.

The draft sets out who can apply and on what terms. An individual may apply to a debt advice provider for a plan, but only after first obtaining advice from a debt advice provider¹. A debt advice provider must not charge a debtor a fee in connection with a plan¹. A debtor may withdraw the application at any time before a provisional plan has effect as the final plan by giving notice to the debt advice provider¹.

Eligibility conditions in the draft require that the debtor owes a qualifying debt, is not subject to a debt relief order, an interim order or individual voluntary arrangement, is not an undischarged bankrupt and is not subject to another plan¹. A debtor must also not have been subject to another plan that was revoked or completed within 12 months of the date of the application¹. The debtor must be unable, or likely to be unable, to repay some or all of their qualifying debt as it falls due, but would be able to repay all of that debt within a period not exceeding 10 years¹.

The draft distinguishes between debts that must be excluded and those that may be. "Mandatory non-eligible debt" means secured debt which does not amount to arrears in respect of secured debt, and non-eligible business debt¹. Council tax for a financial year is excluded except where all the instalments for that year have fallen due and any instalment has not been paid, and student loan debt is excluded¹. Discretionary non-eligible debt includes arrears on the letting of a dwelling house in which the debtor resides as their sole or primary residence, and arrears on a mortgage for such a dwelling, as well as debts owed to a local authority or the Crown, gas and electricity supply, hire-purchase agreements, and agreements with an internet service provider or mobile phone network¹.

The draft provides for annual review and in-year review of plans, variation, payment breaks, revocation and completion¹. A debt advice provider must use the Standard Financial Statement when considering whether the conditions for a plan are met¹. The threshold for creditor objection is expressed in the draft as "A/T x 100 = > 25%"¹.

Why it matters for households

The draft concerns people in England and Wales who cannot repay their debts as they fall due but could clear them within ten years¹. It would sit alongside the existing Breathing Space scheme, referred to in the draft as "the debt respite scheme established by these Regulations and the Breathing Space Regulations"¹. The ten-year cap and the exclusion of certain debts determine which liabilities could be brought into a plan and over what period repayments would run¹.

The commencement provisions are staged. Regulation 1 and regulation 75 come into force 90 days after the regulations are made, while the remainder come into force on "the relevant date", which the draft leaves as "[**** 2024]"¹. Three provisions on enforcement action take effect on the later of the relevant date and the coming into force of sections 157, 181 and 187 of the Renting Homes (Wales) Act 2016¹. The definitions of "lease" and "occupation contract" also depend on section 7 of that Act¹.

What happens next

The draft must be approved by resolution of each House of Parliament and of Senedd Cymru before it can be made¹. The date on which the main provisions take effect has not been fixed in the published draft¹.