The Debt Arrangement Scheme (DAS) is a formal debt management solution available for residents living in Scotland. DAS allows you to freeze interest and charges on your unsecured debts as long as you keep up with your monthly debt repayments. It is an alternative to a Trust Deed. The Debt Arrangement Scheme can prevent your creditors from taking a legal action on you.
To calculate how much your repayments are your income and expenditure is taken into consideration including rent/mortgage, secured loans, utility bills, and essential living expenses (food & TV license etc.) and the surplus is your disposable income which is then distributed to creditors on a pro-rata basis until the debts are paid in full. This may mean repaying debts over a longer term than was originally agreed.
Once your debt payment programme (DPP) becomes approved you are protected from any further creditor recovery action. They cannot add any further interest or charges to your accounts and any assets you have are completely protected.
A charge is made to creditors for the provision of the payments distribution service and application fee. The legislation states the maximum fee to be charged for the application is 2% and the payment distributor’s fee must not be more than 8% of the amount due to be paid to a creditor.
Therefore, if you complete the programme under DAS, creditors will receive a minimum of 90% of the debt owed to them.
Important things to consider
You are ineligible for a DAS if you:
- have a Protected Trust Deed from which you have not been discharged or;
- are bankrupt or subject to a Bankruptcy Restrictions Order or a Bankruptcy Restriction Undertaking or;
- are subject to a time to pay direction or;
- are subject to a time order under section 129 (time orders) of the Consumer Credit Act 1974, (only applicable where a debtor has a single debt to be included in DAS) or;
- are paying a debt(s) under a conjoined arrestment order.
Advantages of a Debt Arrangement Scheme
- It prevents creditors from taking legal action against you.
- Interest or other charges are frozen from the date you apply for a DPP and are written off completely when it is completed.
- Your home will not be affected by the DAS as long as you maintain mortgage or rent payments on it.
- Monthly payments are based on what you can reasonably afford to pay.
Disadvantages of a Debt Arrangement Scheme
- Your credit rating may be affected if you enter a Debt Payment Programme and may affect your ability to obtain credit in the future
- The DPP will last until your debts are repaid – there is no fixed time period
- Individuals cannot apply for a DAS - they must consult a DAS Approved Money Advisor