What is Scotland’s Debt Arrangement Scheme?
The Scottish Government established the Debt Arrangement Scheme (DAS). It allows you to repay your debts in a manageable manner without the threat of legal action from the people to whom you owe money (creditors) like in the Scotland debt free
DAS allows you to make one regular payment into a debt repayment program (DPP). This payment is then divided and distributed among your creditors.
With any amount of debt, you can apply for a DPP.
If you and your spouse, civil partner, or cohabiting partner are both liable for at least one debt, you can apply for a DPP together.
DAS is only one method of dealing with debt. If you want to set up a DPP, you should consult with a financial adviser.
If you decide to go ahead with a DPP, you must have a money adviser submit the application on your behalf.
Check with your local Citizens Advice Bureau to see if you can speak with a money adviser. On the MoneyHelper website, you can also find free debt advice and a money adviser.
Also, read How to Get Out of Debt: A Step-by-Step Guide
When is the Debt Arrangement Scheme a viable option for you?
If you meet the following criteria, the Debt Arrangement Scheme (DAS) may be an option for you:
- You have enough money to make regular payments – for example, you have a steady job and some money left over after paying your bills and essentials every month
- You don’t want to sell your house – You are a homeowner with a lot of equity and you don’t want to sell your house. Equity is the amount of money you would receive if you sold your home and paid off your mortgage. Other debt-relief options, such as a protected trust deed or bankruptcy, may require you to sell your home.
- Other debt options, such as a protected trust deed or bankruptcy, may have an impact on your job – You work in certain jobs that may be impacted by other debt options, such as a protected trust deed or bankruptcy. If you work in the financial sector, for example, you are likely to be fired if you go bankrupt. Bankruptcy or the establishment of a protected trust deed also precludes you from running for public office or acting as a company director.
The Benefits of the Debt Arrangement Scheme
The following are the benefits of the Scotland debt free debt Arrangement Scheme (DAS):
You will not be required to sell any of your belongings or property, such as your home or car (also called assets). However, you have the option of selling your home if you so desire; doing so may allow you to pay off your debts more quickly than making regular monthly payments.
No more enforcement action – You can apply to the Accountant in Bankruptcy to prevent your creditors from taking steps to recover the money you owe them, such as arresting your bank account. This is known as a moratorium,’ and it lasts for six months (it has been temporarily extended to 6 months because of coronavirus). You can also apply for a moratorium if you are considering filing for bankruptcy or establishing a trust deed. In any 12-month period, you may only impose one moratorium.
Interest and debt charges are suspended during the DPP and then terminated at the end. This means that by the end of your DPP, you will have paid off all of your debts.
Employment – Creating a DPP will not prevent you from working in certain jobs or running for public office. Other debt-relief options, such as trust deeds or bankruptcy, limit the type of work you can do.
The Drawbacks of the Debt Arrangement Scheme
The following are the disadvantages of the Scotland debt free Debt Arrangement Scheme (DAS):
paying regular contributions – you may have to pay contributions for an extended period of time to repay your entire debt. Other debt options, such as trust deeds or bankruptcy, resulting in people being discharged from their debts sooner, but they also have other consequences.
Your credit rating will be harmed for as long as you are enrolled in the debt repayment program (DPP). This may make it more difficult to obtain credit in the future, such as a mortgage or a loan.
You can only borrow a certain amount of money during your DPP under DAS. In practice, borrowing money during your DPP may be difficult.
Your home may be in jeopardy – if you have mortgage or rent arrears and set up a DPP, your lender or landlord may still take legal action to reclaim possession of your home. However, you should be able to negotiate with your landlord to prevent this from happening if you can demonstrate that you are taking steps to repay the arrears by establishing a DPP.