Overview

The Families with Children and Young People in Debt (Respite) Bill aims to establish a scheme offering temporary financial relief to families with children facing overwhelming debt. The scheme will provide protections from creditors and help create manageable repayment plans, preventing bankruptcy and ensuring families retain essential services.

Description

Eligibility and Application

The Secretary of State will set eligibility criteria based on parental responsibility for children, level of indebtedness, financial circumstances, and prior scheme involvement. Applications are made through a Debt Advice Provider (DAP).

Debt Advice Provider (DAP) Role

DAPs, authorized under the Financial Services and Markets Act 2000, assess eligibility, create personalized Debt Repayment Plans, and monitor compliance. They must have policies to support vulnerable applicants, including those with children, disabilities, or care-leaver status.

Debt Repayment Plan

The plan includes all relevant debts, detailing repayment amounts and schedules. The debtor must agree to the plan, and the DAP must deem compliance likely. The plan ends upon debt repayment, change of circumstances, non-compliance, or other regulatory stipulations.

Scheme Protections

Scheme members receive protections including a stay on bankruptcy proceedings for relevant debts, a restriction on creditor remedies beyond the agreed plan, prevention of service disconnections (utilities), and a ban on additional charges.

Relevant Debts & Exclusions

Most debts are considered “relevant” under the scheme, except for ongoing liabilities like mortgages, rent, and certain taxes and utilities. Regulations may further define non-relevant debts.

Scheme Oversight and Reporting

The Secretary of State will create regulations governing the scheme’s operation, and will produce an annual report to Parliament on its effectiveness and potential for expansion.

Government Spending

The bill mandates that all expenditure incurred by the Crown and any increases in payments under existing legislation will be funded through Parliament. Specific figures are not provided in the bill text itself.

Groups Affected

• Families with children and young people in debt: Potentially benefit from temporary debt relief and protection from creditors.
• Creditors and lenders: Face restrictions on debt collection methods during the scheme's duration.
• Debt Advice Providers: Take on increased responsibilities for assessing eligibility, developing repayment plans, and supporting vulnerable individuals.
• Public authorities: May be involved in providing related advice and support to scheme participants.

Powered by nyModel