Debt Arrangement Scheme
A Debt Arrangement Scheme (DAS) is a type of payment plan introduced by the Scottish Government and it allows you to pay debts over a longer period of time without the threat of court action from creditors.
To apply for a DAS you must seek the advice and assistance of a DAS approved money adviser. The money adviser takes into consideration what you can reasonably be expected to pay back from your disposable income after taking into consideration all of your debts and living costs. If you and your money adviser agree that you are suitable they then write to the creditors with an offer which is called a debt payment programme (DPP). You will make regular payments to the payment distributor which can be weekly, fortnightly, 4-weekly or monthly. The Payment Distributor is appointed by the DAS Administrator. The Payment Distributor contacts the creditors and pays the money for you.
The creditors in your DAS will be given the opportunity to accept or reject the terms of your DAS proposal; they are given 21 days to respond. If creditors all accept or accept by default (because they do not respond within the 21 days) the DAS is agreed automatically. Creditors in your DAS will then be bound by this DAS as long as you continue to make payments. Some creditors may not agree to the DAS but the DAS Administrator can still approve the DAS if they believe it is ‘fair and reasonable.’ If this happens the creditors are legally bound to accept.
Approved money advisers will not charge you for their advice or for preparing your debt payment programme application. Some companies in the private sector have been approved as money advisers and may charge you for their services. You can check if there is a fee through the Accountant in Bankruptcy service. All fee charging companies must tell you what fees are involved and where you can go to get this for free.
Important points to remember about a debt arrangement scheme
- You have to be able to pay the same amount to the DPP every month.
- Interest and charges are frozen when you first start your application as it can take up to 2 months for a DAS to be approved.
- If your only source of income is benefits, then you may also be able to apply for DAS, but must have available surplus income to make payments.
- None of the debt is written off. Depending on how much you owe and how much you can afford to pay every month, it may take much longer to pay back your debts.
- If a DAS breaks down and you can no longer pay, the creditors can add on the interest and charges that they froze when the DPP was agreed.
- You must seek advice from a DAS Approved Money Adviser who meets the criteria to offer a DPP under DAS as a debt management option.
- If your circumstances change and your available income to pay your DPP suddenly goes down by half, you may be able to apply for a payment holiday. Over the term of your DAS, you can apply for up to 6 months' payment break in specific circumstances. Your DAS will be extended as any payment break is added onto the end of your term.
- If your circumstances permanently change you might want to apply for a variation rather than a payment holiday. You can use a variation to change your payments and make them more manageable in the future. You can also use a variation to increase your payments if you are able to do so and this will shorten the length of your DAS. If you reduce your payments, this will increase the length of your DAS.
- To apply for a Payment Holiday or a Variation, you must contact the Money Adviser who set up the original DAS as they will need to re-assess your circumstances. The Money Adviser will make an application on your behalf to the DAS Administrator and it can take time for it to be approved.
- A DAS will also affect your credit rating as you are making reduced payments. This means it will be harder for you to get credit again in the future while you are paying back a DAS.
- Priority and non-priority debts
- Bank accounts and debt
- Drawing up a budget sheet
- Negotiating reduced payments to your debts
- Free Debt Management Plans
- Debt Arrangement Scheme
- Trust Deeds
- Formal bankruptcy or a ‘sequestration’
- Write Offs
- Will I be 'blacklisted'?
- What can creditors do if I don't pay?
- Should I tell creditors about my mental health?
- Getting help from a specialist adviser
- Next steps