Full and Final Settlement Offers Whilst in a Debt Arrangement Scheme (DAS)

The Scottish Debt Arrangement Scheme (DAS) is very much like a Debt Management Plan (DMP) in that it will allow you to pay back your debts in full based on what you can afford. The main difference between these two debt solutions is that in respect of a DAS, the interest and charges will be frozen and it’s Government backed meaning that you’ll have legal protection against your creditors.

This is why a DAS can be particularly helpful to those people who may be struggling with their debt currently but think they can still pay it back in full. The Scottish DAS needs to be administered by a qualified money advisor who will arrange a Debt Payment Plan (DPP) with your creditors on your behalf.

There are a few disadvantages to a DAS however, namely the impact on your credit rating which will last for six years and the fact that you could be paying off your debt for a very long time depending on your debt level.

That said though, it might well be possible to settle your DAS early with some off your debt written off should you come into some money through a bonus at work, a PPI refund or inheritance for example. You would do this by asking your creditors whether they’d be prepared to accept a lump sum instead of the full balance on your debt in view of a full and final settlement.

Full and final settlement offers – DAS

Let your money advisor know if you’ve come into some money that you want to offer as a full and final settlement to end your DAS early. They may be able to approach your creditors and offer them a sum on your behalf to clear your debt.

When working out your full and final offer, it’s important to take all your creditors into account and be fair to them – split the money you have across all your creditors equally based on the percentage you owe to each one.

The actual full and final settlement offer should be done in writing. Explain your situation clearly and confirm that you’re unable to pay the debt in full and then outline your offer to them. Make sure to say that the amount you’re offering is to be taken in full and final settlement so that you’ve covered yourself against any comeback in the future. Here’s an example of a letter you could write.

To whom it may concern

Account no: _____________________________

I’m writing in relation to the debt owed on the account above. I’ve been in a Debt Arrangement Scheme since (insert date) as I’ve been unable to afford to pay back the money I owe in full. (Insert the details surrounding your financial situation – why you’re struggling to pay the debt – be honest and clear).

I’ve recently come into a lump sum through (explain reason) and I would like to offer this to you as an ex-gratia payment in full and final settlement of my account. The sum I can offer is (insert sum). If my offer is accepted, this is based on the understanding that the debt is settled and I will not be held liable for any further debt. In addition, no further action will be taken against me to pursue payment of this debt by you or any other company.

If my offer is accepted, I would like to ask you to update my credit file to show the above account being settled in full and the account closed. I am able to make payment by (insert date here) if my offer is accepted.

I look forward to receiving your written response.

Yours faithfully

(Your signature)

Your creditors may respond to you directly or via your money advisor. It really depends on how long you’ve been in the DAS and how your creditors view their chances of getting the debt repaid in full as to whether they’ll accept a partial sum or not. If your creditors can see that your situation is likely to stay the same, they may well accept an offer from you – but usually they will reject the first offer.

If they do reject your offer, you can either try to raise more money perhaps by asking a family member or friend to help. In this case though, make sure to remain fair to all your creditors and if you can’t afford to pay what your creditors have counter offered, then leave it at that. Always make sure to get any acceptance of offers in writing to be on the safe side.

Please contact us if you need help working out the best solution to manage your debts.