Debt Arrangement Scheme (Scotland)
The Debt Arrangement Scheme (DAS) is a Scottish debt remedy that enables people to repay their unsecured creditors at an affordable rate, and over a lengthier period of time than the original contractual arrangement.
What is the Debt Arrangement Scheme?
The Debt Arrangement Scheme is a government-backed scheme that allows you to regain control of your financial situation without being under constant threat of legal action from creditors.
A Debt Payment Programme (DPP) is formalised, which is essentially a plan to repay your debts via a single monthly instalment, but at a rate in line with your current financial position. Your assets are not at risk under this scheme, and all interest and charges on your debts are frozen.
Who is eligible for DAS?
You may be eligible to enter the Debt Arrangement Scheme if you:
- live in Scotland
- have obtained advice from an approved money adviser
- earn surplus income that can be used to repay creditors
- are struggling to repay one or more unsecured debts
- have not already entered into a Trust Deed or sequestration
Which debts can be included in the Debt Arrangement Scheme?
Unsecured debts can be included in the Debt Arrangement Scheme – these are also known as non-priority debts. They include, but are not limited to, the following types of debt:
The DAS process
An approved money adviser, typically a licensed insolvency practitioner (IP), establishes an amount that you can afford to repay following an assessment of your financial situation, and puts forward a proposal to your creditors.
If the proposal is accepted, a single payment is made each month to the insolvency practitioner overseeing the Debt Payment Programme. The IP then distributes this to your creditors in the agreed proportions.
The length of a Debt Payment Programme can vary considerably, and is based on an individual’s ability to repay their debt over a ‘reasonable’ timeframe. You are released from the scheme when all your repayments have been made, but there is a degree of flexibility if your circumstances should change in the meantime.
How could entering the Debt Arrangement Scheme affect you?
- You can repay your debts in full, protect your assets, and avoid having to declare formal insolvency
- Creditor legal action is avoided, and freezing interest and charges makes your overall debt level more manageable
- You will be restricted from taking on any more debt whilst involved in DAS, which can be a lengthy process in some instances
- Your credit rating will be adversely affected, and you may find it difficult to obtain borrowing in the future
For more information on the Debt Arrangement Scheme and how it might help you, call our licensed insolvency practitioners for a free initial consultation.
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