Which debts can be included in a Debt Arrangement Scheme (DAS)?
February 21, 2019
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy.
A Debt Arrangement Scheme (DAS) requires you to repay the entirety of your debts through a Debt Payment Programme (DPP) which is then divided amongst creditors by an approved payment distributor. The DPP will be produced after calculating essential expenditure such as utility bills, council tax and mortgage or rent payments. A DAS approved advisor will negotiate the arrangement between the debtor and creditors.
The repayment arrangement is largely made up of unsecured debts and selected secured debts. This is calculated against essential spending which goes towards priority debts.
Priority Debts – These are classed as essential payments to maintain the basic standard of living, such as shelter, heating, electricity and water. This also includes payments towards transport to travel to a workplace. If these payments cannot be included in your DPP, they will be added to your essential expenditure which will determine the calculation for your monthly lump sum payment.
Priority debts include:
- Council tax
- Utility bills
- Car finance, e.g. hire purchase
- Student loan
- Child support
Failure to repay priority debts can result in serious consequences. For example, if mortgage or car finance instalments are left unpaid, your home or car could be repossessed.
Unsecured Debts – Unsecured debt is not tied to equity or an asset so it cannot be repaid through the repossession of an item or property which represents the debt value. These can be factored into your repayment plan, and as a result, all interest and extra charges will be frozen, allowing you to repay the full amount by the end of the DAS.
Unsecured debts include:
- Personal Loans, including payday loans
- Credit cards
- Store cards
- Council tax arrears
- Utility bill arrears
By entering into a DAS, you will be able to protect your credit record from further deteriorating. This is also a mechanism which will restrict creditors, such as the bank or lenders from sending notice letters and court orders, as they will be aware that you have agreed to a DAS to keep up with payments.
Secured Debt – A secured debt is tied to assets or equity which can be repossessed in the event of non-payment. The following are classed as secured debt:
- Mortgages and remortgages
- Car finance, including hire purchase
- Finance on household appliances
In most cases, arrears for the above can be added to your DPP.
Which debts are exempt from a Debt Arrangement Scheme?
Student Loans – From June 2015, student loans were made exempt from a DAS. These are now automatically deducted from employee wages so they can no longer be accepted.
Hire Purchase – Your standard hire purchase payments cannot be included in a DAS, but you are able to include the arrears.
Child Support – This cannot be included in your DPP as the expense will only incur over a limited period of time. As a DAS can run over 10 years, your child would have matured and no longer require support services or maintenance by the end of the DAS period.
A Debt Arrangement Scheme will allow you to make reasonable payments over a period lasting up to 12 years. In the meantime, you will be protected from court action and mounting fees.
One of the flexible features of a DAS is that if your circumstance changes for the better, you are able to make a larger repayment without incurring fees. If you have to decrease the payment amount as your situation has changed, you will be able to apply for an adjustment.
Scotland Debt Solutions has been assisting Scottish residents since 1989. We are debt experts and can discuss the best solution for you. Please contact a member of our team to arrange a free same-day meeting in one of our four offices in Scotland, or a location of your choice.
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