Debt Arrangement Scheme
DAS is a government managed solution which allows you to repay your debts through a debt payment programme (DPP).
The DPP will allow you to pay off your debts over an extended period of time while giving you protection from your creditors taking action against you to recover the debt in the DPP. The DPP can last for any reasonable length of time and, if approved, will freeze all interest and charges on the debt included, resulting in them being waived if you fully complete the DPP. The DPP is not a form of insolvency.
What is the criteria?
To be able to participate in a DAS you need one or more debts and meet the following criteria:-
- Be habitually living in Scotland
- Want to repay your debt without the threat of creditors taking action
- Have a reasonable level of surplus income after deducting your reasonable household living costs
You cannot participate in a DAS if you:
- Are in a Protected Trustee Deed
- Are bankrupt or subject to bankruptcy restrictions order or a bankruptcy restrictions undertaking
- Your DAS application only includes one debt which is subject to a time to pay direction, time to pay order of the Debtors (Scotland) Act 1987
- Your DAS application only includes one debt which is subject to a time order under Section 129 of the Consumer Credit Act 1974
- You are paying a debt under a conjoined arrestment order
You must continue to meet your other commitments such as mortgage payments, rent and utility bills during the duration of the DPP. The DPP makes a pro-rata offer of payment to creditors. When the DPP is completed, creditors will have received at least 90% of the debt they are due.
Your property is excluded from the eligibility criteria, regardless of the level of equity it may hold. You are protected from the risk of losing your home providing you maintain your payments to your mortgage, secured loans and Debt Payment Programme. All other assets also remain protected under a DAS providing you maintain payments to them, where they are subject to hire purchase or conditional sale agreements.
Who provides this service?
To access a DAS scheme you need to seek advice and assistance from a DAS approved money advisor. The Debt Advisor do not offer the DAS, however we work alongside regulated companies that can offer advice on all appropriate solutions.
What is the cost?
The payment distributor will take fees equivalent to 10% of your payments with the balance being paid to creditors. You may, however, still have to pay a management fee in addition to your payments to your creditors.
Can a DAS help me if I am facing legal action?
If you are under threat of any kind of legal action during the plan set up, an “intimation” on the DAS register can be applied, which will give you 6 weeks legal protection whilst the DAS is being set up. You can only apply for this once in every 12 months. If you have already had a citation to attend court for a Sequestration hearing, an intimation will not stop this. However, if you apply for DAS at this stage the Sheriff may give you time for a DAS to be set up as long as they are provided with evidence to show the application is proceeding.
How long does it take to set up a DAS?
The DAS set up process can take up to 6 – 8 weeks to set up as there are certain procedures to follow, which includes requesting up to date balances from creditors, preparing a proposal which is sent to creditors, and dealing with potential objections.
The approval of the DAS is up to the DAS Administrator who is a civil servant appointed by Scottish Ministers and she is also The Accountant in Bankruptcy. Their function in relation to a DAS is approve, vary or revoke DPP’s. All money advisors are approved by the DAS Administrator. If one or more creditors reject your DPP, the DAS Administrator will use a fair and reasonable test when deciding to approve or reject a DPP. The information that they will consider is how much you are offering, how long it will take to clear your debt, creditors’ views and the views of your money advisor. If there are no objections then the DAS is automatically approved.
A DAS can be revoked if you fail to meet the conditions of the DPP. Conditions of the DPP will be discussed in more detail should you choose this debt solution.
What happens when a DPP is rejected?
All parties will be notified if the DAS Administrator rejects a DPP including you and your creditors and your money advisor. You will need to seek advice on the alternatives which could include debt management, protected trust deed or bankruptcy for Scottish Residents.
Can a DAS affect my credit rating?
DAS will have a negative impact on your credit rating until debts have been satisfied.
What else do I need to know?
You can increase your DAS payments at any time and/or pay in lump sums which will bring the term down but you are under no legal obligation to do so.
The DAS administrator, with your approval, may make an offer of composition to each creditor taking part in the DPP;
- after a period of 12 years beginning with the approval of the DPP; and
- where 70% of the total amount of debt due under the programme when the programme was approved, has been paid.
Should you owe any money to your current bank or building society, you will need to change banks. The reason for this is creditors have the ‘right of set off’ which means they are able to set off your income against their debts.
All debt solutions should be very carefully considered. If you are based in Scotland, struggling with debt issues and need debt advice on your options, we are happy to refer you to appropriately regulated debt solutions practices who can offer debt advice on all solutions.
More about Scottish Debt Solutions
Do you need help?
Specialist advisors are available who can advise you on the most appropiate solution to bring you relief from debt