Security from legal action by your creditors can be achieved by entering a Debt Arrangement Scheme. A Debt Arrangement Scheme – or DAS – is a statutory debt management scheme and allows you to freeze interest on the money you owe, and make repayments of a period of time designed to suit you. The scheme was established by the Scottish Government, and is available only to residents of Scotland, as an alternative to Trust Deeds.
A Debt Payment Programme (DPP) is arranged, which protects your home and car as long as you maintain your repayments. Through a Debt Arrangement Scheme all penalties, fees and charges are waived and the interest on the debt frozen when you complete the DPP, relieving much of the worry caused by facing substantial debts.
The freedom from legal action from creditors gives you the time and space to concentrate on repaying your debts, without having to deal with being contacted by your creditors on a regular basis, while a clear and effective DAS provides a pathway to becoming debt free. At the end of the DAS all your debts will be fully cleared, and you will be able to make the most of your new debt-free financial situation.
As the DAS is only available in Scotland, in England and Wales an IVA may be an alternative solution to you debt problems.
What debts can be included in a DAS?
A DAS is generally used to tackle unsecured debts, such as loans and overdrafts from banks and building societies and credit cards, store cards and charge cards. It can also be used to deal with payment arrears – such as council tax or utility bills – or debts from home or online shopping.
Secured debts are unlikely to be suitable for inclusion in the scheme, including mortgage debts, as your property is held as security against the loan. Despite this, your mortgage payments will be taken into account when the DPP is being calculated. Mortgage arrears can be included in the scheme if an agreement is reached. If you have mortgage arrears you must contact the secured lender and, with their approval and agreement, arrears of mortgage payments are able to be included when the monthly DPP payments is calculated.
How can I qualify for a DAS?
Contact a DAS approved Money Adviser like Scottish Debt Adviser
In order to establish a DAS you must first contact a DAS approved Money Adviser. The Money Adviser will make an application on your behalf, as individuals are unable to apply themselves. Our experience in dealing with arranging such schemes means we will be quickly able provide you with details about your potential solution, but first one of our advisers will discuss your circumstances with you to establish a full picture. Once we are fully aware of your income and expenditure, and your financial position is clear, we can then work towards a proposal. The first confidential discussion will help us understand the details of your debt, earnings, financial commitments and family situation, as well as outlining any assets you have. In this way we can calculate the disposable income which can make a monthly payment to creditors through a DAS.
You decide if DAS is the best option for you
If a DAS is a suitable option, our adviser will give you all the information necessary to make a decision about whether to proceed, including what costs will be incurred by the process and how they will be paid.
If you decide a DAS is the best solution for you, our adviser will prepare the best proposal they can for you, and submit an application for a DPP and contact your creditors in order to get their approval for the scheme.
Creditors respond to your application
After receiving an application for a DPP your creditors will have a period of three weeks in order to either approve or reject it. If after those 21 days they have failed to respond they are deemed to have consented to the proposal. If objections are received from creditors then the DPP will be examined by the DAS Administrator (the Accountant in Bankruptcy), and if the application is considered to be ‘fair and reasonable’ your creditors can be legally be forced to accept it.
Once a DAS is approved a series of affordable monthly payments are arranged, which are paid to an approved Payments Distributor. From these payments a monthly management fee is deducted, before the remainder is paid to the creditors. The costs of the Payment Distributor are met by the creditors, not by you.
Completion of DAS payments
Once you have completed the schedule of repayments and met the terms of the DPP all the debts included in the DAS will have been paid in full. At the point when the final repayment is made your debts are cleared and all penalties, charges and interest are waived. Depending on your circumstances, and how much is available for repayments at the outset of the scheme, the length of the DPP can vary. Such a process could last for up to 10 years.
Conditions on a DAS
In order to gain and successfully complete a DPP, several conditions must first be met. It is only available for those resident in Scotland, and those applying cannot already be in a Protected Trust Deed, bankrupt or subject to a bankruptcy order. The length of the DPP is dependent on making the repayments as agreed, with no fixed time period. Only upon the final repayment is the DDP completed.
There are many advantages to beginning a DPP.
- Commencing a DPP prevents creditors from beginning legal action against you
- Since the Money Advisor deals with the creditors throughout the process you are freed from the stress and strain of being contacted directly.
- With the advice and support of our advisers you can confident that the monthly payments are based on what you can reasonably pay, and with the DPP designed to allow you to continue to make payments on your mortgage your home should not be affected so long as you maintain payments.
- In some situations business debts may be included in your plan, so if you are a sole trader it may be possible for such debts to be taken into consideration.
- If your circumstances change during the DPP, applications can be made to the DAS Administrator. If you are struggling to meet your monthly payments and contact the Money Adviser, a decision may be taken to apply for a payment holiday or variation after assessing your situation. Depending on your circumstances the level of repayments may be reduced or suspended for a period of up to six months.
- As long as any missed payments are agreed with the DAS Administrator then you will still be protected from legal action by your creditors.
- It is possible to make increased payments to your DPP, however if such payments are being make regularly it may be better to make an application to alter the details of the DPP in order to decrease the term of the plan.
- DAS is only available to residents of Scotland.
- Secured debts are not included in a DAS.
- Individuals cannot apply for a DAS – they need to contact an Approved Money Advisre
- Going through a DPP will also affect your credit rating, and your future ability to obtain credit.
With our team of DAS Approved Money Advisors – with approval from the Scottish Government to advise clients and establish Debt Payments Plans on their behalf through the scheme – we are able to use our experience to help you on the journey to becoming debt free. We will always work to ensure you are fully informed of the advantages and disadvantages of the DPP, equipping you to make the best choice for your needs. Contact Scottish Debt Adviser today for quality debt advice.