Statutory Debt Repayment Plans (SDRPs)

Posted by Strettons on 30th June 2022 -

The UK Government has published detailed proposals for Statutory Debt Repayment Plans (SDRPs), a continuation of Breathing Space Regulations 2021.

The consultation closes on 5th August 2022, and the government intends for it to be implemented in 2024.

This consultation sets out the policy development which has taken place since 2019, so it now includes:

• The draft regulations necessary to implement the SDRP
• Questions on outstanding policy issues and operational considerations
• A consultation stage draft impact assessment

What is SDRP?

SDRP is planned to be a debt solution focused on debt repayment rather than debt relief. The plan is to protect debtors from enforcement action, creditor contact, interest, fees, and charges on their debts while they repay them. Debtors will also not be eligible for the SDRP if they are subject to a debt relief order, interim order, individual voluntary arrangement, or undischarged bankrupt.

The idea of the scheme is the debtor will make a single payment as agreed by an approved debt adviser. They will then distribute the monies to the creditors as agreed in the plan. The government have advised debtors will only be eligible for the SDRP if they have not been subject to another plan within the most recent 12 months. This is to safeguard against abuse of the protections through repeated usage.

If the arrears include housing costs, the creditor must be given notice of the proposals and will have 14 days to object on specified grounds. However, the Insolvency Service could rule that the repayment proposal was fair, making a creditor’s approval irrelevant. The debtor will be able to request a one-month payment break within any given 12-month period or at other times if there is a significant change in circumstances. The payment term of the debtor's plan will then be extended to reflect the person entering a payment break.

To give debtors sufficient time to prepare for their first payment into their plan, the government proposes that debtors be given 42 days from the date their plan becomes final to make the first payment. Overall the repayment plan can be repaid over an average of 7 years. However, in some circumstances, this can be extended up to 10 years.

So, what does this mean for Landlords?

The potential bad news is any rent arrears owed by the debtor could be included in the plan. Although this should not prevent a court from making a possession order, it will present a challenge to a landlord in recovering those arrears, even if they had a previous court order. The good news appears that ongoing rent not covered by a Repayment Plan would have to be paid monthly on top of the plan.

The latest government update was published on 17th May 2022. Please click here for further information.