What is the Debt Arrangement Scheme (DAS)?
The Debt Arrangement Scheme, or DAS, is a debt solution created by the Scottish Government. It was designed as a way to help people who are struggling to pay back their debt to do so in a more manageable fashion.
Only available to those living in Scotland, DAS allows you to apply for a ‘Debt Payment Programme’ (DPP). This is what helps you to make regular affordable payments to your debts for a reasonable amount of time.
There is no minimum or maximum amount of debt to be able to apply for this solution – but you do need to owe money to more than one company/person – and you need to apply through a licensed money advisor.
Your DPP will last as long as it takes to clear all of the debts that you choose to include, although usually this is capped at 10 years unless agreed by your lenders. All interest and charges are frozen during this time and lenders are no longer able to take any action against you.
How much does DAS cost?
Getting advice about a DAS or DPP is usually free, but you may be charged a fee for setting one up depending on what company you choose. This used to be 10% of every payment you made into your arrangement.
However, due to legislation changes proposed by the Accountant in Bankruptcy (AiB), this solution became free to all who use it on Nov 4, 2019, and all fees will instead be charged to the lenders included. This means what once your DPP is approved, every penny you pay will go towards the balances owed.
How much your payments will be will depend on your affordability. This is calculated when setting up your application before it is submitted.
DAS advantages and disadvantages
As with all debt solutions, it’s important to be aware of the advantages and disadvantages of the DAS before considering entering one.
- Your assets, such as your car and your house, are protected – meaning you won’t be asked to sell them
- Interest and charges are frozen on the debts included in your DPP
- Your payments are based on what you can afford, meaning you won’t pay outlandish amounts towards your debts
- Lenders cannot take any further action against you once your arrangement is approved
- Unlike other debt solutions, it does not run the risk of affecting your employment
- Your debts will be cleared once you have completed the arrangement
- You may have to make payments towards your debt for a long time compared to other solutions
- Once approved, details of your arrangement will be posted on the DAS register, which can be viewed by anyone (although they’d have to go looking for it, making it unlikely that your friends and family will see it)
- It will show on your credit file for a total of six years, which will affect your credit rating
- Getting further credit whilst in a DPP is difficult and you are only able to borrow a certain amount of money if you do manage to get approved. This would also have to be approved by your DAS administrator
- None of your debts will be written off, you will have to pay the balances in full
The DAS process
Entering into a DAS is straightforward, however, it’s important to be aware of the process to make things as simple as possible.
Is DAS right for you?
The first, and perhaps the most important step in your DAS journey, is to decide if it’s the right solution to your situation. The best way to do this is to speak to a money advisor, who will be able to give you all the relevant information need to help you.
If you then decide that this is the route you want to go down, the advisor will go through all your income and expenditure to calculate how much you can afford to pay. This will form the basis of your proposal.
Now that you’ve reached this stage, your money advisor will draft up a document detailing the arrangement you wish to propose.
This will then be sent to your lenders for them to consider and either approve or reject. They will have 21 days to do this – however, thanks to the new legislation mentioned above, applications are now automatically approved even if lenders do object.
There is a catch though. Any rejecting lenders have to account for less than 10% of your overall debt level – but that doesn’t necessarily mean you’re out of luck.
If you end up in this situation, your application will then be sent to the DAS Administrator. It will then be down to them to decide whether your proposed arrangement is ‘fair and reasonable’ – which, if they do, will ultimately then mean your DPP will get approved.
Life with the DAS
Once your DPP has been approved, all you need to do is make your regular payment for the agreement length of time. Your details will be posted on the DAS register which will then be noted on your credit file.
Your arrangement will be passed to a payment distributor, who will be in charge of spreading your payments between all of the companies/people included. Interest and charges are then frozen on these debts. Lenders will also no longer be able to take any further action against you at this stage.
You may be required to complete yearly reviews of your circumstances to make sure that your payments remain affordable. If your situation changes at any point during your DPP, it’s important to contact the money advisor, who will remain responsible for administering your DAS. They will be able to make any necessary changes to your arrangement to help keep your arrangement going.
The end of your arrangement
Once you have made all your payments to your DPP, you will have cleared your debts in full. Lenders that were included are no longer able to hold you liable for the debt you owed and they cannot come after you with penalties or charges.
The details of your DAS will be removed from the register and issue the lenders with paperwork confirming that your debts are now satisfied. It is then up to the lenders to update this on your credit file.
As far as the DAS showing on your credit report goes, a copy of your completion paperwork will need to be sent to the credit reference agencies to update this. It will then show at satisfied on until a year after you have finished the DPP – at which point it will fall off altogether.