Debt Arrangement Scheme
A Debt Arrangement Scheme (DAS) is a legal debt management scheme introduced by the Scottish Government in 2014 to help people repay their debts.
What is a Debt Arrangement Scheme (DAS)?
A Debt Arrangement Scheme (DAS) will allow you to pay off debts over an extended amount of time whilst protecting you from any further action from companies looking to get the money they are owed. This is called a Debt Payment Programme (DPP).
A DAS is an alternative to Trust Deeds or Sequestration in Scotland, and IVAs or Bankruptcy in England, allowing you to freeze the interest and charges on debt and repay over a period to suit you within 10 years.
Managed by a DAS administrator, these arrangements can last for varying lengths of time. How long it lasts depends on the amount of debt you are in and how much you can afford to pay.
There is no minimum or maximum level of debt needed to be able to enter into a DAS, and the companies you are in debt to that are included will receive regular payments towards the balance owed under legally binding terms.
Am I eligible for Debt Arrangement Scheme?
You can qualify to enter into a DAS if you:
- Live in Scotland
- Have one or more debts
- Have a reasonable amount of money left after all your outgoings
- Are not bankrupt, subject to a bankruptcy restrictions order or undertaking, or in a protected trust deed
What debts can be included in a Debt Arrangement Scheme?
All unsecured debts can be included, with the exception of child support payments and court fines. Mortgage/secured loan debts can be included; however, ongoing mortgage/secured loan payments cannot be included, and you must continue to make these out with the DPP.
How does a Debt Arrangement Scheme work?
If you can clear your debts within 10 years, you can apply for a debt payment programme under the DAS. By entering a DAS, you commit to making one affordable monthly payment into a DPP, which is based on all the companies included being paid regularly.
It must be managed by an approved money advisor, who will act on and communicate with the people you owe money to on your behalf.
You can employ a money adviser though free advice companies such as your local Citizens Advice Bureau, your local authority’s money advice team. Alternatively, an insolvency practitioner (or a suitably qualified member of his/her staff) can act as a money adviser for DAS.
The free advice companies will not charge a fee for their services whereas an insolvency practitioner will normally charge a fee.
What’s the process of entering a Debt Arrangement Scheme?
There is a simple process that will be followed by your advisor to include each company you’re in debt to in the proposal. Here we guide you through the journey of setting up a DAS.
- Proposals of the DAS are sent to every company, giving them 21 days to respond if they object.
- If there are no objections the DPP is automatically approved.
- If one or more companies do object, then the DPP can still become approved if it is judged to be “fair and reasonable” by the DAS Administrator (Accountant in Bankruptcy).
- The money advisor will help you produce a substitute debt payment programme based on the current situation and send this for approval.
- As long as the revised proposal is fair, the creditors will not be able to stop the debt payment programme being approved.
- If the DPP is rejected, you have the right to appeal against the decision, but you may need to look at other options, such as a protected trust deed or bankruptcy.
- It is possible that your circumstances may change whilst you are repaying your debts under DAS, in which case the DPP may be varied to accommodate this change without charge.
What are the advantages of a Debt Arrangement Scheme?
- You will only make a single monthly payment, based on what you can afford, to an approved advisor who will pay this to the companies you are in debt to.
- Entering a DAS will protect you from companies issuing demands or threatening court action.
- The DAS will guarantee to freeze all interest and charges on the debts included once approved.
- Guarantees legal protection from the companies included once approved.
- You can apply for a payment holiday of up to six months should you find it difficult to pay.
- A DAS is a flexible arrangement which means if your circumstances change you could be able to vary your payment amount to make it more affordable – or to pay it off quicker if your situation allows.
- Any wage arrestments that are already in place is stopped.
- Valuable possessions you own will be unaffected, including your home, even if there’s substantial equity in it.
- Creditors who don’t accept the proposals can be forced to comply with the arrangement if it’s deemed to be ‘fair and reasonable’.
What are the disadvantages of a Debt Arrangement Scheme?
- Your credit rating may be badly affected.
- If you don’t comply with the conditions of the DPP then the DAS could be revoked. This means companies are then free to pursue legal action and to add back on their interest, fees and charges if they want to.
- There’s no debt written off – you will only get relief from further interest, fees and charges.
- A DAS could take longer to pay off than other debt solutions.
Frequently Asked Questions
Once your arrangement has been approved, it is put on the DAS register. This is available to the public so will likely have a negative impact on your credit score.
Much the same as other debt solutions, it will show on your credit report for at least six years.
You apply for a Debt Repayment Programme (DPP) within a DAS, which allows you to pay back your debts in one affordable payment rather than lots of unaffordable ones.
You will make this payment for any reasonable length of time up to 10 years. Once you have completed this, your debts will have been paid in full.
Yes. Once your arrangement has been approved, the companies included are not able to contact you or take any further action against you. Interest and charges are also frozen from the day it is approved and are written off when it has been completed.
You aren’t able to include any of your secured debts in a DAS, such as your mortgage or any hire purchase agreements.
This solution is only available to those living in Scotland. There is no minimum or maximum amount of debt needed to be able to apply for a DAS, but you do need to be in debt to more than one company.
You also must be able to afford to make a payment towards your debts and must seek advice from an trained money adviser before setting up a DAS.
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