7 Advantages of using a Debt Arrangement Scheme (DAS) to become debt-free

If you’re trying to deal with overwhelming amounts of debt, you may be eligible for the Debt Arrangement Scheme in Scotland. DAS is an extremely effective and much-used method of repaying unsecured debt, and can help you get back on track financially without risking your home.

A Debt Payment Plan (DPP) is negotiated with creditors, and consolidates your payments into one monthly amount. One of the rules of DAS is that you must receive advice from an approved money advisor so that you understand what will happen, as well as the advantages and drawbacks of repaying in this way.

Here are seven of the main advantages associated with this government-backed scheme:

1.   Make one affordable repayment for all your unsecured debts

If you have numerous credit card debts, as well as personal loans and a bank overdraft, you’ll probably be struggling to keep on top of repayments. The Debt Arrangement Scheme amalgamates all your payments into a single affordable monthly amount, which you pay to your DAS administrator.

They distribute the money amongst your creditors at the pre-agreed ratio – you benefit from less creditor pressure and are able to budget reliably.

2.   Extra time to repay your debts

Having an extended period of time available to repay debt helps to relieve stress, and reduce financial hardship. The timescale will have been agreed by your creditors, who are legally obliged to cease any action they’re taking against you whilst you repay what you owe from your monthly income.

This helps you avoid having to enter sequestration or a Scottish Trust Deed, which both endanger your home, when all you need is a little breathing space in which to repay.

3.   You may be able to obtain free advice from approved money advisors

One of the eligibility requirements for DAS is to obtain professional advice from an approved money advisor. Free debt advice is usually available from Citizens Advice, and local authority organisations may be able to help, although some charge a small fee.

Scotland Debt Solutions offers money advice to Scottish residents in debt. We can establish whether the Debt Arrangement Scheme is suitable in your circumstances, and help you decide on the best way forward.

4.   The threat of creditor legal action is removed

One of the major concerns when you can’t escape debt is the threat of creditors taking you to court. When you sign up for DAS this threat is removed, as creditors aren’t allowed to take legal action as long as you continue to keep up your repayments.

5.   There is in-built flexibility if your circumstances change

It is common for individual circumstances to change during the term of a Debt Arrangement Scheme, but flexibility is built-in to deal with the situation. If your income goes down, due to job loss or illness for example, your DAS administrator may be able to arrange a payment break if necessary, or extend the overall payment term.

6.   All interest, charges and fees on the debt are frozen

When you’re struggling with debt it’s often interest and charges added by the creditor that make it so difficult to repay, as every month the debt is compounded. As soon as the Debt Payment Plan comes into force, all charges, fees and interest on the unsecured debts are frozen. You carry on making your monthly payment, without the added stress of having to manage burgeoning interest rates.

7.   You’re able to repay what you owe in full

This helps you rebuild your credit file over time, as lenders see that no debts have been written off. This is important when you need to borrow or obtain credit in the future, and will make a difference even if you’re only applying for a small amount. You may also have a wider choice of lower-cost products.

If you’re worried about your current debt situation and want to find out more, Scotland Debt Solutions can help. We are licensed insolvency practitioners who focus solely on helping Scottish residents out of debt. Call one of our experts to arrange a free same-day meeting at one of five offices throughout Scotland.