Debt Arrangement Scheme (DAS)
The Debt Arrangement Scheme is a statutory debt management scheme. It was introduced by the Scottish Government in to help people living in Scotland to repay their debts to eventually become debt free. Anyone living in in Scotland who is having difficulty maintaining their payments to creditors can apply for a debt payment programme under the DAS.
The scheme, which has to be set up by a Money Advisor freezes interest, fees and charges on your debt, from the date your DAS Debt Management Plan is approved.
Under the scheme, you’ll have a new repayment plan known as a Debt Payment Programme (DPP) which involves you making affordable monthly payments towards your unsecured debts over a longer period of time until your debts are repaid.
The Debt Arrangement Scheme is similar to an informal Debt Management Plan in that your debts will be required to be repaid in full and unlike a Trust Deed where a significant amount of your debts can be written off.
How the Debt Arrangement Scheme Works:
If it’s decided that DAS is the best way forward for you, the first thing we will do is let your lenders know.
Once we have completed your financial review we will refer your case to an independent Insolvency Practitioner who will appoint a DAS-approved ‘Money Advisor’ who will help you calculate what you can afford to pay each month.
Subject to your lenders agreeing to your proposal, you plan can start.
If your lenders don’t agree to your proposed plan, we can consider other alternative solutions (Trust Deed and Debt Management Plan).
Although your DAS Debt Payment Programme has to be agreed with your lenders before it can begin, if lenders turn the proposed plan down, the DAS Administrator has the power to make them accept it in some circumstances.
Like most debt help solutions, there are both advantages and disadvantages that should be considered prior to committing yourself and they are noted below:
- Once your repayment programme has been approved your creditors are unable to take any legal action to reclaim the money that you owe them.
- Once the programme has been approved, creditors are unable to continue to add any interest and charges to your existing debt.
- Your home will not be affected by the DAS as long as you keep up with your mortgage repayments.
- You will only make one single monthly payment to you plan rather than having to deal with your creditors on an individual basis.
- An application for a DPP under a DAS must be made on your behalf by an approved Money Advisor. The Money Advisor who arranges your DAS plan may charge you a fee for their services.
- Your details will be recorded on the DAS register. This is a register which can be accessed free of charge. Creditors and credit reference agencies check this register on a regular basis and while you have a DPP, you will not normally be able to obtain further credit.
- If you miss payments or make part payments resulting in you owing the equivalent of two of your agreed DPP instalments or if you fail to comply with any of the conditions of your DPP, then your DPP can be revoked. If your DPP is revoked, you will be liable for all interest, fees and charges that would have been payable had you not entered into your DPP.
- You’re Money Advisor or the DAS administrator, subject of approval, can request to gain money from the sale of an asset or the guarantee of extra payments such as any lump sum from any future income.
- Your credit rating will be affected.
To be eligible for DAS you must:
- Have one or more unsecured debts
- Be resident in Scotland
- Have sought advice from a DAS approved money adviser
- Have a reasonable level of disposable income to enable you to make a monthly contribution
The money adviser who recommends DAS to you may or may not charge for their advice. However if you use the services of a Continuing Money Adviser, they are likely to charge you a fee over and above your monthly payment to the Debt Payment Programme (DPP).
As the payment distribution fees are paid by your creditors, 100% of your payments are paid to your creditors. You may however, still have to pay a management fee in addition to your payments to your creditors if you decide to use the services of a continuing Money Advisor.
Clients, who have chosen a DAS scheme as their preferred debt solution are referred to one of our carefully chosen licensed Insolvency Practitioners who will then appoint a qualified money advisor who will act on your behalf.
Debt Advisory Services (Scotland) Limited do not charge you any upfront fees or administration fees for the provision of our review or referral services.
We do however receive a fee from insolvency Practitioner for the time it takes to prepare and submit your case to them.
The fee that we receive from the insolvency Practitioner is equivalent to the total of 2 months of your contribution, subject to a maximum of £600.
Once your case is passed to the Insolvency Practitioner, you will be informed in writing by them of the proposed fees prior to committing to a DAS scheme.