What is a DAS?
DAS stands for Debt Arrangement Scheme. It is a formal solution for people struggling with unmanageable debt. Currently, the Debt Arrangement Scheme is only available to people living in Scotland, and there is no equivalent solution for the rest of the UK. In a DAS, interest and fees on your unsecured debts are frozen, and you make a single monthly payment towards them. This payment is based on what you can afford rather than what your creditors demand. During the plan, your creditors cannot hassle you.
Who is Eligible?
To be eligible for a DAS, you must meet a few, fairly basic criteria:
- Be resident in Scotland
- Have one or more debts
- Not be subject to sequestration (Scottish bankruptcy) or any other insolvency procedure
- Have a reasonable amount of surplus income after meeting household expenses
There is no set level of debt you need in order to be eligible for a DAS, but this solution is designed for people who are unable to manage their current debt commitments.
What Debts can be Included?
All unsecured debts can be covered by a DAS, for example:
- Personal loans
- Store Cards
- Credit Cards
- Payday Loans
You can also include mortgage or secured loan arrears, but not ongoing payments. A few debts cannot be included in a DAS:
- Child Support Payments
- Court Fines
- Benefits Overpayment
What is a DPP?
DPP stands for Debt Payment Programme – this is the repayment plan agreed between you and your creditors under the DAS. Each DPP is worked out on an individual basis by a qualified money advisor, who mediates between you and your creditors.
Although interest and fees on your debts are frozen under a DAS, you will be required to pay back what you currently owe in its entirety. A DAS usually lasts for no more than ten years, and if you think repaying your debts within this timeframe would prove unmanageable, a Trust Deed might be a better solution. This is because Trust Deeds allow you to write off some of your unaffordable debt.
The DAS Process
If you decide that a DAS is the right solution for you, the first action to take is to speak to a qualified money advisor. They can assess your situation and help you decide whether a DAS fits your circumstances. If you decide to proceed with a DAS, the next step is for your advisor to work out how much you could afford to pay each month, and how long the DPP should last. This proposal is then presented to your creditors, who have 21 days to reject it. If no creditors reject the proposal within this time, it is automatically accepted. If one or more creditors do object to the DPP, it is brought before a DAS advisor at the Accountant in Bankruptcy (AiB), Scotland’s insolvency service. If the AiB find the proposal to be ‘fair and reasonable’, it will come into effect. You will make the agreed-upon reduced payments, with all interest and fees frozen, until you have cleared your debts.
Pros and Cons
The key advantages of a DAS are:
- Prevents your creditors from contacting or taking legal action against you
- You only need make one monthly payment
- You will pay less towards your debts each month
- All interest, fees, and charges on your debts are frozen
- A DPP can be set up to deal with a single debt
- Your monthly payments can be adjusted if your circumstances change
- You can take payment breaks from your DPP if required
The key disadvantages of a DAS are:
- You must repay the entirety of what you owe, no debt is written off
- If you do not keep up with your DPP payments, it can be revoked
- The plan may have a negative effect on your credit rating
- 10% of your monthly payments will be taken as administrative fees
- Once in a DPP, your details will appear on the public DAS register for the plan’s duration
- You will not usually be able to access further credit whilst in a DPP
For more advice about DAS and other debt solutions, call a helpful Creditfix advisor on 0808 2085 198.