Debt Arrangement Scheme
The Debt Arrangement Scheme (DAS Scotland) is one of the main statutory debt solutions for people in Scotland.
Alongside Trust Deeds, and other formal Scottish debt solutions, the Debt Arrangement Scheme enables Scottish residents to repay their debt in manageable repayment amounts with legal protection.
Introduced in 2004, the Debt Arrangement Scheme in Scotland is administered by a qualified Money Adviser and is overseen by the Scottish government.
The Debt Arrangement Scheme can be used by individuals and businesses who are struggling with unaffordable debts.
With the Debt Arrangement Scheme, you repay your debt through what’s known as a Debt Payment Programme. If approved for the Debt Arrangement Scheme (DAS), you will commit to repaying your debt via a Debt Payment Programme (DPP) through which you will pay back what you owe in regular instalments.
Importantly, your Debt Payment Programme plan will be based on your disposable income, so it will be affordable for you.
Through a DAS, you will be protected from your creditors taking action against you to recover the debt. When the Debt Arrangement Scheme is in place, all interest and fees are frozen and will then be written off if you fully complete the Debt Payment Programme.
The Debt Arrangement Scheme freezes interest, fees and charges from the date your DPP is approved. As long as you fully complete the DPP then these interest and charges cannot be added back by your creditors.
If you need a payment break as a result of, for example, illness or unemployment or an unplanned increase in expenditure, then this could be provided for a period of up to 6 months, this type of payment break can be applied for as many times as is required during your DPP provided you meet the necessary criteria.
It will take 3 weeks to process your Debt Arrangement Scheme and give your creditors enough time to approve the proposal. However, public holidays and gathering information from you may extend this process a little further.
Trust Deed Scotland® have a DAS Approval rate of 99.9% and we will discuss the advantages and disadvantages with you, prior to you making a decision on whether you choose to proceed or not.
Debt Arrangement Scheme Example
How your new monthly Debt Payment Plan may look
Council Tax Arrears
Total Debt £10,808
* Subject to creditor acceptance * Payment subject to individual circumstances * Credit rating may be affected * Example debt payment programme only
At Trust Deed Scotland® we have industry-leading DAS Approval rates. It is our aim to give you the information you need in order to make an informed decision on whether a formal debt solution such as the Debt Arrangement Scheme is right for your needs.
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What our Debt Arrangement Scheme customers say…
With the Debt Arrangement Scheme, there is no fixed term. Your Debt Payment Programme will last as long as it takes you to repay your debts to the people you owe money to.
You will repay your debts in a ‘reasonable’ period of time and this largely depends on your own circumstances. E.g. the repayment plan is based on your affordability and so you will not be pressured by your creditors to repay them more quickly. All interest, fees, and charges are frozen while you are in a DPP.
No, the original debt is repaid in full with interest and charges being frozen. Debt write off is only possible through other formal Scottish debt solutions such as Protected Trust Deeds and Sequestration.
If you would like to compare different Scottish debt solutions, you can download our free Scottish debt guide or give us a call on 0141 221 0999 to find out more.
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Length – Trust Deeds last for 4 years. After this time, any remaining unaffordable debt is paid off. With the Debt Arrangement Scheme, they last until all your debt is repaid, this can be up to 12 years.
Amount of debt – to qualify for Scottish Trust Deeds, you must owe at least £5,000 of unsecured debt. For the Debt Arrangement Scheme in Scotland, there is no minimum debt level.
Assets – A Debt Arrangement Scheme does not involve any assets.
There are other differences and alternative Scottish debt solutions, you should always get debt advice tailored to your own circumstances, as all cases are unique depending on your situation and affordability.
A Scottish Trust Deed is a statutory debt solution in Scotland that reduces unsecured debt repayments down to one single monthly payment and writes off a significant part of your unaffordable debts.
The length of a Scottish Trust Deed can vary based on the debt level involved, the affordability of the individual, and other factors including assets, however, the typical length of Trust Deeds in Scotland is 48 months.
A Protected Trust Deed acts as a formal, legally binding agreement between an individual and their creditors.
If you’d like to learn more about whether a Scottish Trust Deed is right for you, or if the Debt Arrangement Scheme suits your lifestyle, needs and affordability better, we recommend that you call us on 0141 221 0999 or complete our online form to receive tailored debt advice.
You are eligible for a DAS (Debt Arrangement Scheme) if you are a resident of Scotland and also have money left over at the end of each month (after you’ve paid your household costs, like rent/mortgage/accommodation, food shopping, and utility bills) and you can clear your debts in a reasonable amount of time.
We will work with you to find out if DAS is the best debt solution for you, based on your situation.
A Debt Arrangement Scheme can include most unsecured debts, including:
✓ Credit Cards ✓ Store Cards ✓ Personal Loans ✓ Overdrafts ✓ Payday Loans ✓ Council Tax Arrears ✓ Utility Bill Arrears ✓ Shopping Catalogues ✓ Credit Unions ✓ HMRC
The following secured debts but only the arrears – this is optional:
✓ Mortgage Arrears, which are missed mortgage payments ✓ Rent Arrears, which are missed rent payments ✓ Car Finance Arrears, which are missed payments on your car, such as with an HP agreement
The following cannot be included in a DAS: Student Loans. Court Fines. CSA / Child Maintenance Arrears
Find out more about Trust Deeds too as there variations in the types of debt that can be included in a DAS.
For an individual, a Debt Arrangement Scheme in Scotland can last for a ‘reasonable’ length of time with no official minimum or maximum length.
It is unusual for the Debt Payment Programme (DPP) to last longer than 10 years, and there may be more suitable solutions for you such as Trust Deeds.
For businesses, a business Debt Arrangement Scheme may last for a maximum of 5 years.
How long does it take to set up DAS? If you choose to enter into a Debt Payment Programme under the Debt Arrangement Scheme Scotland, the first steps involve your Money Adviser proposing the DPP to your creditors. A DPP under DAS is proposed to creditors.
Trust Deed Scotland® have an experienced in-house team that work with our clients from initial enquiry for help with debt, through to implementation and maintenance of the solutions that we offer. This is important as it allows greater continuity between the advisor that you speak to and your dedicated money adviser thereafter. If you work with one organisation, who in turn works with other organisations within that chain, it will often take longer to set up a DAS as a result.
The Trust Deed Wizard® tool allows us to speed up the process of setting up as DAS, as it allows us search for your creditors, work out your disposable income, request up to date balances from the people that you owe money to, prepare your proposal which is then sent to creditors and dealing with potential objections.
Your DPP payments will be calculated based on what you can afford to pay after all of your essential expenditures have been paid.
The monthly costs of administering the scheme are borne by the creditors i.e. from every £ received into the scheme, 22p is used to pay these costs; this 22p is split between the DAS Administrator (2p) and the Money Adviser (20p).
There may also be a payment made to the Payment Distributor (PD) and, if so, this would result in the Money Adviser’s fee being reduced by the same amount as paid to the PD. The remaining amounts are distributed amongst all creditors on a pro-rata basis and a successfully completed DPP deems all debts to be repaid in full.
This is the same for all individuals whether they use an insolvency practitioner/private sector firm (e.g. Harper McDermott Ltd) or a public sector organisation (e.g. CAB or local authority Money Adviser)
Low and Grow DAS is a formal debt solution introduced in January 2021 that may help Scottish residents who have experienced a loss of income due to the Coronavirus pandemic.
The solution may appeal to those who are in a position to repay their debt over a longer period of time but require a short term solution in the intermediate period before their regular income returns to normal may be eligible to apply for a Low and Grow DAS.
The benefits and risks are the same as any other debt payment programme (DPP) undertaken as part of the Debt Arrangement Scheme.
When a person repays their debts through DAS, interest and contractual charges are frozen. DAS lifts wage arrestments; stops court action including Sequestration (bankruptcy in Scotland) and requires one monthly payment that is distributed to all creditors on their behalf.
When applying for a DPP using the Low and Grow process, it is recommended that a minimum of 5% of the overall debt is paid for the duration of the discretionary condition period of lower payments, or a minimum of £35 per month, whichever is lower.
When your Debt Payment Programme is approved, you are placed on the DAS register. This is coordinated and managed by the DAS administrator and is available to potential lenders who you may be looking to borrow from.
Credit rating agencies use the DAS Scotland register, besides other insolvency registers to add information on to your credit history, which then reports your credit score.
Therefore, your DAS is likely to negatively impact your ability to take out further credit. Like all other formal insolvency solutions in Scotland, the presence of the Debt Arrangement Scheme on your credit report will last for a minimum of 6 years.
However, it is also worth noting that while the Debt Arrangement Scheme can last a longer period of time as repayments can continue to up to approximately 10 years, some alternative solutions, such as Trust Deeds, will end typically after only 48 months.
While your credit score may be important for you later in life, if you’ve been missing payments and been served a default notice on those debts, your credit score is highly likely to have already been severely impacted.
If you want to apply for a DPP (Debt Payment Programme) with Trust Deed Scotland, you would typically follow this process:
1️⃣ Find out whether a DPP is the right debt solution for you. Use our online debt calculator tool, or speak to one of our experienced debt advisors today.
2️⃣ We’ll give you detailed information on the risks and benefits of any solutions you may be eligible for which shall help you to decide if a DPP is the best solution for you, based on your affordability, lifestyle and needs.
3️⃣ Once you are happy to proceed, we’ll apply for a DPP as part of the Debt Arrangement Scheme, we’ll contact your creditors and you will start making payments to them through your DPP.
Find out more about the advantages and disadvantages of Trust Deeds and Minimal Asset Process route to bankruptcy as alternative solutions by calling our dedicated debt advice team today on 0141 221 0999.
Find out more
Contact an experienced debt adviser at Trust Deed Scotland® today and find out more about the debt solutions available to you in Scotland.
Our advice team explain the pros and cons of all available debt management solutions and will explain how the Debt Arrangement Scheme works, its advantages and disadvantages plus alternative solutions such as Trust Deeds.
We are here to help you decide the best course of action to suit your individual needs and support you every step of the way. If you would like a fresh start, get in touch today.