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Your Guide to the Debt Arrangement Scheme

A Debt Arrangement Scheme (or DAS for short) is a debt solution that was introduced by the Scottish Government specifically for residents of Scotland. The scheme gives you some breathing space by allowing you to pay off your debts over a longer period of time, up to around 10 years. Uniquely, DAS also freezes the interest and charges that have accrued on your debt; affording you more time to pay it back, without increasing what you owe.

You only pay what you can afford each month, after covering the cost of supporting yourself and your family. Furthermore, your car and home are not considered in a DAS, so you will not be forced to use them to raise funds for your creditors.

To enter a DAS, you have to sit down with a Money Adviser and work out how much you can afford to pay each month towards your debts. After consulting with your creditors, your Money Adviser then draws up a personal debt repayment programme and submits it to your creditors. If they all agree then your programme is approved.

However, unlike a Scottish Trust Deed, if it is not approved by your creditors, then the DAS Administrator, a senior civil servant working for the Scottish Government, will assess whether your programme is ‘fair and reasonable’. If they decide it is a ‘fair and reasonable’ plan, then she will approve it.

How does the Debt Arrangement Scheme work?

Step One – establish affordable payments

The Debt Arrangement Scheme works by establishing a personal Debt Payment Programme (DPP). This begins with a Money Adviser working with you to establish what you can reasonably afford to pay once all your essential outgoings have been calculated.

Step Two – make formal offer to creditors

The money adviser then confirms with your creditors how much you owe and then makes a formal offer to your creditors who get three weeks to object or consent to the programme.

Step Three – approval of the offer

If all your creditors agree to the programme, your programme will be approved. If any creditor fails to respond within the three week period, then it is assumed that they have consented. Where a creditor objects, your programme is passed to the DAS Administrator, who is a senior Scottish Government civil servant who will decide if your programme is; fair and reasonable;. If she does, then she can overrule the objections of your creditors and approve it.

Step Four – begin payments

You then begin paying your monthly payments to the Approved Payment Distributor, who will then split your payments between each of the lenders. You do not need to pay for the Approved Payment Distribution service, which is paid for by your creditors.

Interest, fees, charges and penalties on existing debts will be frozen from the date the programme is approved and, assuming you successfully complete your DAS, these items will not need to be repaid.

Step Five – completion

At the end of your agreed payment term you will have repaid your debts in full and no longer be required to make monthly payments.

Why should I enter into a DAS?

A Debt Payment Programme under the Debt Arrangement Scheme may be the ideal solution for you if:

  • You want to clear your debts without taking out a loan
  • You want protection from your creditors
  • You want to pay off debts without interest
  • You have a lot of equity in your home
  • You would prefer a Debt Expert dealt with your Creditors
  • You’d like to pay a single amount per month
  • You wish to avoid formally being declared insolvent

Like other formal debt solutions you cannot apply directly to the Scottish Debt Arrangement Scheme and must apply through an approved money advice service, such as Your Debt Expert.

Advantages of the Debt Arrangement Scheme

  • You will be protected from any legal enforcement action raised by your Creditors
  • No interest, fees, penalties or charges can be added to your existing debt
  • Monthly payments are based on what you can reasonably afford to pay
  • An Approved Scottish Government Payment Distributor will distribute the amount you pay to your creditors each month, which will not cost you.
  • If you have an earning arrestment, this will be recalled allowing you to use the money to pay all your creditors.

Disadvantages of the Debt Arrangement Scheme

  • The scheme is currently only available in Scotland
  • An application must be made by an Approved Money Advice Service such as Your Debt Expert
  • It is a formal scheme which must be operated in accordance with Government Regulations
  • Your name and address will appear on a public register. However, access to these details are limited – ask one of our advisers for details.
  • Your credit rating will be adversely affected

For friendly advice on the Debt Arrangement Scheme or any debt solution, please call us on 0141 227 7730.

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Brought to you by Peter Dean

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Peter Dean has helped thousands of people with quality money advice, through Your Debt Expert.

Peter Dean is one of the most highly-qualified and experienced debt solutions professionals in Scotland. He established Carrington Dean in 2001 following a distinguished financial career in which he became a Partner with one of the world’s leading accountancy firms and a recognised insolvency expert.

Peter is a Fellow of the Chartered Management Institute, a Fellow of the Association of Business Recovery Professionals, a Member of the Chartered Institute of Arbitrators, and a Member of the Insolvency Practitioners’ Association.

 

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Peter Dean