How long does the DAS last?

When deciding which debt solution is right for you, one factor which is likely to have a big influence on your decision is how long it will last for. How long it will take to repay your debts under the Debt Arrangement Scheme (DAS) will vary from person to person.

Under Scotland’s DAS, you commit to an individually tailored Debt Payment Plan (DPP). This plan helps you to clear your debts by freezing interest and fees, and extending the length of time you have to pay them back.

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What is the average length of a DPP?

According to the Accountant in Bankruptcy (AiB), Scotland’s insolvency service, the average length of a DPP is six and a half years. To put this into context, this is one and a half years longer than the length of an average Trust Deed. Despite this, there are some reasons why a person might choose a DPP over a Trust Deed when it comes to sorting out their debts.

For instance, under the DAS you will maintain greater control of your assets than you would by using a Trust Deed. This is because, in the final year of a Trust Deed, if you have enough equity in your home you will be expected to contribute it to the repayment of your debts by remortgaging. This will not happen with a DPP.

What is the maximum length of a DPP?

There is no official minimum or maximum length for a DPP, but it is unusual for the plan to last for more than 10 years. If you think that it would take you longer than 10 years to clear your current levels of debt, a Trust Deed might be a better fit for you. This is because Trust Deeds allow you to write off debts which you cannot afford.

On the other hand, if you feel that you could pay off your current debts, including interest, fees, and charges, given an extended period of time, choosing an informal solution such as a DMP could be a better option. Although this is a more expensive way to deal with your debts, it has a much smaller impact on your credit rating.

This will make accessing further credit much easier, so a DMP can be a good option if you are planning a significant investment such as buying a home or starting a business.

What factors affect the length of a DPP?

How long a DPP lasts is ultimately affected by two factors:

• How much debt you currently have
• How much you can afford to pay towards your debt each month

Higher levels of debt and lower monthly payments will combine to lengthen your DPP. As a rule of thumb, if you could pay off your current level of debt in less than 10 years using your monthly disposable income, the DAS is a good option for you. If this would be unfeasible, you could be better off with a Trust Deed. The best way to find the right debt solution for you is to speak to a qualified debt advisor. Click here to learn more about the DAS.