The Debt Arrangement Scheme (DAS) was introduced and backed by the Scottish Government and is designed to allow you to pay your debts back over an extended period while freezing interest and charges. It is an alternative to the less formal debt management plan which does not offer any form of legal protection from creditors.
A Scottish DAS can only be administered by an approved money adviser, and they will apply for what is known as a Debt Payment Plan on your behalf. Your money advisor is qualified to give you the best advice on your financial situation and will guide you along the way as well as administer your DPP to the DAS register.
Advantages of the Debt Arrangement Scheme
- Freeze interest and charges
- Government legislation offering you legal protection from creditors
- Repay your debt in an affordable way
- Not a loan
- Flexible repayment structure if your circumstances change
Disadvantages of the Debt Arrangement Scheme
- The length of time repaying the DAS may take many years depending on your debt level
- There is no element of debt write off and you will repay your debt in full
- Your credit rating will be affected for at least 6 years
A Scottish DAS will only work if you have money left over each month after all your essential bills and living costs are taken off. Your approved money advisor will run through your income and expenditure to see if you have a reasonable disposable income to make monthly payments towards your Debt payment plan. A proposal will then be sent to your creditors asking them to accept the reduced payment plan which will also ask for interest and charges to be frozen.
You should only use a Debt Payment Plan if you can clear your debts in a reasonable timeframe. If your monthly repayments will result in you paying your debts back over a period of over 4 years then it would be advisable to look at other Scottish debt solutions such as a Protected Trust Deed. Your approved money adviser will manage your payments and have them evenly distributed amongst your creditors until all your debt has been paid off.
The DAS Process
1. Seek advice and explore your options.
The first thing you have to consider when struggling with your debts is whether you can afford to pay them back. It may just be that you need more time to pay them back. If this is the case a Debt management plan could be an option. The draw back with a Scottish Debt management plan is that you will have to pay back your full debt including interest and charges. In Scotland the Debt Arrangement Scheme is designed to allow people who are struggling to repay debts, to freeze all interest and charges on what is owed.
If you feel you simply cannot keep up with payments, it might be more appropriate to explore the formal debt relief options available in Scotland.
The most important first step to take is to talk to a qualified Money Adviser.
2. If your Money Adviser recommends a DAS you will commit to a Debt Payment Plan.
If a Debt Arragement Scheme is the best option for you then your Money Advisor will arrange a Debt Payment Plan (DPP). The DPP will allow someone to repay their debts in full based on their monthly disposable income.
3. Your Money Advisor will submit your DAS application to your creditors for approval.
All interest and charges will be frozen as soon as your application is accepted by all the parties that you owe money to. Debtors will also be legally protected from creditors taking any action against them to reclaim money or assets. Creditors have 21 days to object the DAS application.
4. You will begin repaying your agreed monthly amount until the full outstanding sum is paid.
The length of your Debt Payment Plan will vary depending on the level of your debt and the amount you have agreed to pay each month. This can range from a few years to many years and will be based on what is known as the "fair and reasonable test".
5. Your Debt Arrangement Scheme will conclude.
At the end of your debt arangement scheme the debtor will debt free. Once the DPP has concluded the debtors details are removed from the DAS Register and creditors will be informed that their outstanding debts have been repaid.
Debt Arrangement Scheme Frequently Asked Questions
The creditors are likely to accept this if you have started missing payments and have shown that you've actively seeked debt advice by talking to a money advisor. It shows that you are willing to repay your debts.
Creditors will recieve a regular payments from the person that owes the debt and 90% of the total debt will be repaid unlike other more formal solutions in Scotland that see a large portion of the debt written off.
It also means that there will be no additional debt recovery costs for creditors and the repayment plan is overseen by a professional money adviser. Creditors can get full transparency of the case by following it through the DASH system.
Money advisors in Scotland are trained to give you all the options that are available to you and your situation. They will recommend the best action to take and help you budget to maximise your monthly income.
Money Advisors must legally inform you that there are free services and help available to a DPP commencing. All charges should be made explicitly clear before you start your DPP
Fill out of Qualifier form to see if a Debt Arrangement Scheme is available to you.
If you enter into a Debt Payment Plan through the Debt arrangement scheme then your details will be added to the DAS register. This is a public register which anyone can access for free - including your creditors and anyone else working in the credit industry. Credit agencies and creditors often check this register and update individuals credit ratings accordingly.
In many cases you do not have to tell your employer about your DAS unless your Money advisor has arranged for payments to come directly from your wages. If this is the case your employer will have to complete what is called a form 3. If you are an accountant or solicitor, in a job that requires an element of Trust or is governed by a professional body, entering into a DAS could have a negative impact on your employment situation but in most other cases it will not.
When you enter into a DAS you are agree to pay back all your debts in full but your interest and charges will be frozen for the duration of this repayment plan. You will only be suitable for a DAS if you are able to repay your debts in a suitable timescale. If your monthly payments stretched beyond 48 months then a Trust Deed or sequestration would probably be a better option but your money advisor will be able to explain the best option for your situation.