Debt Arrangement Scheme (DAS)

The Debt Arrangement Scheme (DAS) is a Scottish Government-backed initiative offering a structured repayment plan for individuals facing unmanageable debt. By setting up a Debt Payment Plan (DPP), the DAS offers an affordable way to repay creditors without the threat of legal action.

Summary

• DAS is a Scottish Government-backed initiative offering structured repayment for unmanageable debts
• DAS allows people to repay debts using a single monthly payment with frozen interest and charges
• To qualify, you need to live in Scotland and have worked with an approved money adviser
• DAS can negatively impact your credit rating for the duration of your Debt Payment Programme (DPP)
• You can end your arrangement early if your financial circumstances improve
• DAS is only available to Scottish residents

What is the Debt Arrangement Scheme in Scotland?

The Debt Arrangement Scheme (DAS) is a debt management program in Scotland designed to help individuals struggling with unsecured debts.

Through DAS, you can consolidate multiple debts into a single affordable monthly payment plan. This plan is based on your ability to pay, which is assessed by a money advisor.

You will make a series of fixed monthly payments to creditors you owe money to, who are legally bound to freeze interest and charges on included debts.

The DAS provides a structured and manageable approach for individuals to repay their debts over an extended period, offering financial support without resorting to more drastic measures like bankruptcy.

Will the Debt Arrangement Scheme (DAS) affect my credit rating?

Enrolling in the Debt Arrangement Scheme (DAS) will negatively impact your credit rating for as long as your Debt Payment Programme (DPP) lasts.

As long as you are in the DPP, it will be listed on your credit file. While the DPP is active, debt specialists, creditors, credit reference agencies, and future lenders will have access to that information. This will potentially make it more difficult to secure credit, be accepted for mortgages or loans, or open a new bank account.

Debts included in a DAS

Unsecured debts

Debts eligible for inclusion in a Debt Arrangement Scheme (DAS) are mostly unsecured debts, like credit card balances, personal loans, and overdrafts.

Examples of unsecured debts eligible for inclusion in a Debt Arrangement Scheme (DAS):

• Credit card balances
• Store card debts
• Overdraft balances
• Utility bill arrears
• Unsecured lines of credit

Debt excluded from a DAS

Secured debts

Secured debts, like mortgages or car loans, can't be included in the Debt Arrangement Scheme. Secured debts involve collateral, and the creditor has a legal claim to the asset in case of non-payment.

Examples of secured debts that must be excluded from a Debt Arrangement Scheme (DAS):

• Mortgages
• Car loans (auto loans)
• Home equity loans
• Hire purchase agreements for goods with a security interest

If you enter the Debt Arrangement Scheme while having existing secured loans, you will be expected to continue the repayment of those loans, although this will be taken into consideration by your money adviser when deciding how much you can reasonably afford to pay towards the DAS each month.

You are also unable to include fraudulent or criminal debts in the DAS.

How to apply for the Debt Arrangement Scheme

Applying for the Debt Arrangement Scheme (DAS) involves a series of specific steps, from making the initial application to working with a DAS-approved money adviser. We've highlighted the key steps in the application process below.

Apply for a temporary moratorium on debts

To protect yourself from legal action from creditors during the DAS application process, you can apply for a temporary moratorium on your debts. This period offers a respite, giving you time to set up the necessary arrangements without facing immediate legal consequences for your unpaid debt.

Get debt advice from a reliable debt management company

You might want to engage the services of a reputable debt management company to guide you through the DAS application.

The cornerstone of this process is a money adviser who will assess your financial situation, helping you determine the most suitable course of action, and most reputable debt management companies have in-house money advisers who can support you.

Work on your application with an approved money adviser

Your money adviser is a professional who is equipped to evaluate your financial situation objectively, taking into account your income, expenses, and outstanding debts. Their expertise ensures that your proposed Debt Payment Programme (DPP) is realistic and sustainable.

You will collaborate closely with your money adviser when working on your DAS application. Not only will they ensure your proposed payment plan is affordable, but they also play a vital role in liaising between you and your creditors later in the process, presenting a realistic and fair repayment plan and negotiating on your behalf.

Submit your application to the Accountant in Bankruptcy

Once you have your application ready, it needs to be submitted to the Accountant in Bankruptcy (AiB) for approval. The AiB is the government body responsible for overseeing insolvency processes in Scotland, and they will review your application and make sure everything is in order.

Await creditor approval for your debt management plan

After submitting your DPP, your creditors will review the proposal. The success of your application hinges on the approval of the majority of your creditors. While not all creditors need to consent, a significant proportion must agree for the DPP to proceed. Once it does, creditors will need to pause their debt recovery efforts.

Comply with the terms of your Debt Payment Programme (DPP)

Upon receiving creditor approval, it's time to adhere to the financial commitments outlined in your approved Debt Payment Programme. As long as you make the agreed-upon monthly payments to your money adviser each month, they will distribute the funds to your creditors accordingly.

How long do Debt Payment Programmes last?

The duration of Debt Payment Programmes (DPPs) under the Debt Arrangement Scheme (DAS) varies based on individual circumstances. The length of the DPP is influenced by factors such as the total amount of debt owed and your level of disposable income.

The Debt Arrangement Scheme is designed to create realistic and sustainable repayment plans that ensure you can meet your financial obligations without undue hardship. While some DPPs may extend over a shorter period, others with higher debt amounts or limited disposable income may require a longer timeframe for repayment.

The flexibility in tailoring DPP durations to individual financial circumstances is a key feature of DAS. A debt specialist will be able to advise on whether this approach is the best way to resolve your unique debt problems.