The Debt Arrangement Scheme (DAS) is a debt remedy administered by the Accountant in Bankruptcy (AiB). It enables you to pay off your debts over a longer period of time; interest and charges are frozen, and you don’t need to declare full insolvency as your debts are repaid in full.
With so many people struggling financially due to coronavirus, the rules around DAS have been relaxed to prevent further repayment problems and a potential slide towards bankruptcy.
So what are the relaxed rule changes with the Debt Arrangement Scheme, and how do they help you repay your debts?
The Low and Grow Process (DAS) was introduced in January 2021, and is intended to help people whose financial situation has worsened due to coronavirus - crucially, where this is expected to be temporary.
The new process offers a ‘breathing space’ in which eligible people can make a reduced payment for a specified time, without the threat of the agreement being cancelled or legal action by creditors.
Each application is viewed individually, and in some cases a ‘zero payment’ could be put forward – if a debtor is expected to find employment in the very near future, for example. A ‘token’ payment would demonstrate commitment to repaying debts, however, and is more likely to be sanctioned by creditors.
The Accountant in Bankruptcy recommends a minimum payment for the duration of the Low and Grow plan - the lower of 5% of the total debt, or £35 per month. A duration of up to six months with a review by a money adviser at the three-month point has also been advised.
A proposal is sent to creditors for their approval, along with information on the debtor’s situation and reasoning as to why their current circumstances are viewed as temporary. Where 90% or more of creditors vote in favour, the new plan is automatically approved.
Where they believe a proposal is ‘fair and reasonable,’ as DAS Administrator the Accountant in Bankruptcy can overrule a decision made against the proposal if more than 10% (by value) of the creditors did vote against.
The key factor for eligibility for this scheme is the short-term nature of any financial difficulties you’re experiencing, as the DAS rules will only be relaxed on a temporary basis. Examples where you may be eligible include, but are not limited to:
Your money adviser would need to explain why they believe you can pay a higher amount when the specified period of low payments comes to an end, and this is a crucial element for obtaining the agreement of creditors.
The Debt Arrangement Scheme is an informal arrangement with creditors, and the time taken to repay debts can vary. It’s expected that people in debt will repay their creditors within a ‘reasonable’ period, with 10 years generally being the maximum timescale.
Scotland Debt Solutions can provide more tailored advice on the relaxed rule changes for DAS, and whether you might be eligible for a Low and Grow DAS payment plan. We specialise in helping Scottish residents to deal with debt, and can offer you a free same-day consultation. We operate offices around Scotland, so please contact one of the team for more information.
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