What is the Debt Arrangement Scheme in Scotland

The Debt Arrangement Scheme (DAS) is a scheme set up by the Scottish Government to help people pay back their debts in a manageable way without the threat of court action from the people they owe money to (creditors).

Under DAS you can set up a debt payment programme (DPP) and make one regular payment into the DPP which is then divided up and sent to your creditors.

You can apply for a DPP with any amount of debt.

You can also apply for a DPP with your spouse, civil partner or cohabiting partner if you are both liable for at least one debt.

When the Debt Arrangement Scheme might be an option for you

The Debt Arrangement Scheme (DAS) might be an option for you if the following are true:

• Enough money to make regular payments - you have enough money to be able to pay back your debt in a reasonable time. For example, you have a stable job and you have some money left every month after paying for your bills and for essentials.
• You don't want to have to sell your home - you are a homeowner with a high level of equity and you don’t want to have to sell your home. The equity is the amount of money that you would get after selling your home and paying off the mortgage. In some other debt options, such as a protected trust deed or bankruptcy, your home may be at risk and you may have to sell your home to release the equity.
• Your job might be affected by other debt options - you are employed in certain jobs which would be affected by other debt options, such as a protected trust deed or bankruptcy. For example if you work in the financial sector, you are likely to be dismissed if you become bankrupt. Becoming bankrupt or setting up a protected trust deed may prevent you from standing for public office or acting as a company director.

Advantages of the Debt Arrangement Scheme

The advantages of the Debt Arrangement Scheme (DAS) are:

• Belongings and property – you will not have to sell off any belongings and property such as your home or your car (also called assets) as you might have to do with a trust deed or bankruptcy. Although you can decide to sell off your home if you want to. This might mean you could pay off your debts more quickly than by making regular monthly payments.
• No more enforcement action – if you are thinking of setting up a debt payment programme (DPP) under DAS, you can apply to the Accountant in Bankruptcy to stop your creditors taking any steps to recover the money you owe them. This is called a 'moratorium' and it lasts for 6 weeks. This will mean that your creditors can no longer take steps such as arresting your bank account. You can also apply for a moratorium if you are thinking of applying for bankruptcy or setting up a trust deed. You can only set up one moratorium in any one 12 month period.
• Interest and debt charges - interest and debt charges are suspended during the DPP and then cancelled when it is complete. This means that you will have cleared your debts by the end of your DPP.
• Employment – if you set up a DPP, this will not prevent you from working in certain jobs or taking up public office. Some other debt options, such as trust deeds or bankruptcy do restrict the kind of work you can do. 

Disadvantages of the Debt Arrangement Scheme

The disadvantages of the Debt Arrangement Scheme (DAS) are:

• Paying regular contributions – you may have to pay contributions for a long time to repay your entire debt. Some other debt options such as trust deeds or bankruptcy lead to people being discharged from their debts sooner, although they also have other implications.
• Credit rating – setting up a debt payment programme (DPP) will affect your credit rating for as long as you're in the DPP. This can make it harder to get credit like a mortgage or a loan in the future..
• Borrowing money – you can only borrow a limited amount of money (obtain credit) during your DPP under DAS. In practice, it may be hard to borrow any money during your DPP.
• Your home – if you set up a DPP, it doesn't automatically prevent a lender or a landlord taking steps to recover possession of your home if you have mortgage or rent arrears. Although it is likely that you will be able to negotiate with your landlord to stop this happening as you can show that you are taking steps to repay the arrears by setting up a DPP. 

How long will I have to pay contributions?

One of the main reasons for setting up a debt payment programme (DPP) under DAS is that you have enough money to pay off your debts in a reasonable time. There is no definition of what a reasonable time is. Ultimately the Accountant in Bankruptcy will decide whether the proposed length of time for payments is reasonable when he considers your application for a DPP. As a general rule, more than 10 years might be unlikely to be reasonable unless all your creditors are happy with this.

If your circumstances change during the lifetime of your DPP, you can apply to change the amount of contribution that you are making. 

Also if you have a temporary drop in income, for example because you have lost your job or you are ill, you can apply for a payment break for up to six months. The period of time that you are unable to make payments for is added on to the end of your DPP.

How much does the Debt Arrangement Scheme cost?

It is free for an individual to set up a debt payment programme (DPP) under DAS. Money advisers are no longer allowed to charge you a fee for helping you to apply for a DPP under DAS.

You don't have to pay an administration fee for the running of the DPP. Your creditors do have to pay this fee though.