DEBT ARRANGEMENT SCHEME
The Debt Arrangement Scheme (DAS) is a formal debt management solution available for residents living in Scotland. DAS allows you to freeze and discount fees, interest, penalties and charges as long as you keep up with your monthly debt payments. It is an alternative to trust deeds and other similar debt management solutions. The Debt Arrangement Scheme can prevent your creditors from taking a legal action on you.
If you have spare income after your essential household expenditure is met, this would be offered to your creditors. This would be on a pro-rata basis until the debts are paid in full. Which may mean paying debts over a longer term than was originally agreed (usually up to a maximum of 10 years).
Once your debt payment programme (DPP) becomes approved you are protected from any further creditor recovery action. They cannot add any further interest or charges to your accounts and any assets you have are completely protected.
You are ineligible for a DAS if you:
- have granted a Protected Trust Deed from which you have not been discharged or;
- are bankrupt or subject to a Bankruptcy Restrictions Order or a Bankruptcy Restriction Undertaking or;
- are subject to a time to pay direction or;
- are subject to a time order under section 129 (time orders) of the Consumer Credit Act 1974, (only applicable where a debtor has a single debt to be included in DAS) or;
- are paying a debt(s) under a conjoined arrestment order.
Once the DPP is approved, as long as you maintain agreed payments, your creditors cannot take any debt recovery action. They must also stop adding interest and charges to the balances.
Your assets are not taken into consideration with this option. So homeowners, for example, are protected as long as mortgage/secured loan payments are maintained.
You make only one monthly payment via an approved payment distributor who then pays each of your creditors.
Your credit rating may be affected for the duration of your DPP.
If the majority of your creditors object, the DPP may not become approved.
FAQS ABOUT THE DEBT ARRANGEMENT SCHEME
The Debt Arrangement Scheme is a Government backed debt repayment programme. It freezes interest and charges on your debts and prevents creditors from taking any recovery action against you while you remain in the plan. As you are repaying your debts back in full, it also protects your assets. This includes your home and any equity you have.
Don’t Fret About Debt offer all statutory debt relief and repayment options, including the Debt Arrangement Scheme. We can advise you on the scheme and discuss if it is the best option for you. We can act as your approved money advisor for the duration of the DPP. Everything from the initial call through to the last letter at the end of plan is through one contact.
You can also get advice on the Debt Arrangement Scheme online at www.dasscotland.gov.uk.
As you will no longer be making your regular contractual payments to your debts your creditors will, by law, issue you with a default notice and this will be placed on your credit file which will affect your credit rating.
Your details will also be entered onto the DAS register which is regularly searched by credit reference agencies and creditors who may update your credit file to reflect this.
You are eligible if you:
- Are habitually a resident in Scotland
- Want to repay your debts
- Have a reasonable level of disposable income after your regular monthly financial commitments have been paid (rent, council tax, travel, food and so on)
All debt advice is free from us. We can advise you on all your options so you can make an informed choice which suits your circumstances best.
Once your DPP is approved, you are protected from any legal action to recover the debts included in the plan as long as you make your payments. If you fail to make two or more payments then your DPP may be revoked. If this happens, your creditors can pursue you again which may include legal action.
Once your Debt Payment Programme is approved, any interest and charges added after this date will be written off.
Once you decide to enter a Debt Payment Programme (DPP) under the Debt Arrangement Scheme we will work out how much you can afford to pay towards your debts each month. This is called your disposable income. We work this out using the Common Financial Tool. This is used industry wide to create consistency across how financial statements are prepared.
A DPP can last for any reasonable period of time, which is usually no more than 10 years.
Your money advisor will write to your creditors with your proposal to repay your debts. They have 21 days to accept or reject it. Once approved, you pay your agreed payment to the payment distributor monthly and they pay it to your creditors on a pro rata basis.
This means that each month all of your creditors will receive a payment, however how much they each receive is based on their percentage of the total debt.
All interest, fees, penalties and other charges are frozen provided that the application is approved.
Your debts are repaid in full via the Debt Arrangement Scheme. To work out how long it will take, you divide your total debt amount by your disposable monthly income. You should also factor in any administration fees your money advisor may charge for acting on your behalf for the duration of the plan.