A DAS allows you to repay your debts at an affordable rate, while still leaving you with enough money for your household bills and general living costs.
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If you live in Scotland and you’re finding it difficult to manage your debt, a Debt Arrangement Scheme is one of a number of debt solutions available to you. A Debt Arrangement Scheme (also referred to as a DAS) allows you to apply for a debt payment programme (DPP). Residents in England, Northern Ireland, and Wales have a similar option available to them, known as a Debt Management Plan (DMP). While there are some similarities between the two options, a DAS and a DMP are both different in their own way.
A Debt Arrangement Scheme may be suitable for someone who has money left over each month after paying his/her priority bills. It’s an option that helps you make affordable monthly payments to your non-priority debts.
A DAS allows you to repay your debts at an affordable rate, while still leaving you with enough money for your household bills and general living costs.
Before you apply for any debt solution you should consider the advantages and disadvantages of the solution and how these may impact you. Our experts will be more than happy to walk you through these and explain them in detail.
A DAS allows you to make regular monthly payments, calculated in accordance with your current financial situation. You will still have enough money left over to afford a reasonable standard of living, it gives you more control over your finances compared to other debt solutions. You will not have to sell your assets including your car or property, as you may have to do this with a Trust Deed or Sequestration.
The amount you pay will be evenly distributed amongst your creditors each month, part of your monthly payment will cover the fees. All interest, fees and charges that are being applied to your eligible debts will be frozen. Your creditors will be unable to contact you or take additional legal action against you. The flexibility allows you to alter your monthly payments or apply for a 6-month payment break if your financial circumstances are due to change.
Once this debt payment programme has been completed, your debts will be written off. However, it is important to remember that you will still have to pay any outstanding debts that were not included in the initial application as well as debts that aren’t eligible for inclusion within the Debt Arrangement Scheme.
After being accepted for a debt payment programme, your details will be entered into the DAS register. This is an online register that members of the public can access. A DPP will appear on your credit file for 6 years. If you fail to keep up with your monthly payments, the DAS could fall through, and your creditors (people you owe money to) may start applying interest and/or take further legal action against you.
With a DAS, depending on your debt level, you may be making repayments over a longer duration of time. You will only be allowed to borrow a limited amount of money during your DPP under the DAS. However, in reality it may be difficult to borrow any money at all.
If you have decided that a DAS is the right solution for your circumstances, we will put you in contact with a professional money advisor, should you need further help or advice, we’ll be right here to help.
The money advisor will help you set up and complete the Debt Arrangement Scheme. He/she will confirm that you understand how the DAS will work. At this stage, you will have to provide details about your income, assets, debts and creditors. These will be reviewed with you, and you’ll be able to agree on an affordable monthly payment. This process will ensure that all eligible debts are included within the DAS.
DPPs under DAS can be set up by a privately licensed debt management company. Each individual company may charge a different set-up fee. Once a DPP is approved, 10% of your monthly payments will cover the running costs of the programme. This 10% fee will cover the day-to-day management, correspondence and distribution of your payments to your creditors, in addition to carrying out regular financial reviews of your circumstances. This percentage is set by law.
The amount you will pay each month is usually calculated by identifying what your disposable income will be. This is how much money you have left over after covering your main expenditure. If there is a change in circumstances, e.g. a pay rise or loss of work, this will be reviewed, and you will have the opportunity to increase or decrease your monthly payments accordingly.
If you want to apply for a DAS, you must meet the right criteria in order to be considered eligible. The following must be met:
• You’re able to make contributions to your debts
• You must currently live in Scotland
• You owe money to one or more creditor(s)
• Your monthly disposable income must be at least £100
You will make monthly affordable payments to your DPP under DAS. This money is distributed between the creditors that you owe money to. 10% of your monthly payment will be deducted to cover the administration costs. The payments distributor will retain 8% and 2% will be sent to the Accountant in Bankruptcy (AiB) who acts as the administrator and oversees the DAS on behalf of the Scottish Government.
A Debt Arrangement Scheme is designed to help you manage debts in a more affordable way. If you’re struggling with any of the following ‘non-priority debts’ listed below, a DAS may help you become debt free.
• Personal loans
• Pay day loans
• Credit cards
• Store cards
• Catalogues
• Overdraft, including fees and charges
There are also ‘priority debts’ which can be included within a DAS, these priority debts may include council tax arrears, benefit overpayments and utility debts such as gas, electricity or water.
There are debts which can’t be included within a DAS, such as court orders permitting to child maintenance, child support or student loans.
You will not have to sell your home. Other debt solutions may require you to sell your home in some scenarios.
If after reading this, you think that a Debt Arrangement Scheme would be the right solution for you, contact us to discuss this solution in more detail.
Our expert advisers will give you advice and provide you with all the relevant information needed for you to make an informed decision that’s best for your situation.
Call now on 0800 121 48 63 or use the contact form on this page.
Latest figures from the Insolvency Service have indicated that personal insolvencies increased by 9.2% to 9,954 in September 2021 compared to August’s figure of 9,118.
Personal insolvencies in England & Wales increased by 0.2% to 9,106 in August 2021 compared to July’s figure of 9,090 and were 42.7 % higher than August 2020.
900,000 people are still expected to be on the scheme when it finishes on 30th September. As a result, huge uncertainty surrounds what might happen next.
