What is a Debt Arrangement Scheme (DAS)

A Debt Arrangement Scheme (DAS) is a government-backed scheme designed to help people repay their debts over an agreed amount of time without the threat of legal action. The aim of the scheme is to allow you to pay what you can afford at regular intervals based on your disposable income whilst freezing any interest, fees, penalties at the start and then waiving them upon completion. 

Debt Arrangement Schemes (DAS) are available to anyone in Scotland who is finding it difficult to cope with and pay back the debts they owe to any number of creditors.

The schemes are backed by the Scottish government and they were introduced through legislation in 2004. They were created to offer individuals protection from court actions by creditors and a means of managing their unsecured personal debts more effectively without the need for any declaration of insolvency.

If your personal debts are mounting up and you are steadily losing control over your finances then it is always advisable to take professional debt advice to arrest your slide along what can be a very slippery slope. Different debt management options are available and more suited to particular situations but Debt Arrangement Schemes are a relatively straightforward way to get a firmer grip on your finances.

Because a DAS is backed up by government legislation in Scotland, it provides legal protection from creditors and peace of mind to the individuals involved. Although a DAS does not reduce the actual amount of money that a person owes to their creditors, its stipulations include a freeze on all charges and interest relating to debts previously accrued.

The creation of a Debt Payment Plan that can be agreed upon by both debtors and creditors is a vital part of the process as far as Debt Arrangement Schemes are concerned. The first point of order is to establish precisely what amounts are owed to which creditors by the individual aiming to officially enter a DAS agreement. From there, your DAS Approved Advisor will go through and scrutinise your ability to pay back the amounts you owe in light of your income and your everyday outgoings.

The aim of a DAS is to give indebted individuals a certain amount of breathing space with regard to their debts without resorting to sequestration or a Trust Deed. On the other side of the equation, creditors can at least be assured that the money they are owed will be recovered under the terms of a DAS deal.

Quite how long it might take to pay back debts while a DAS agreement is in place will vary from case to case. However, the idea is to establish a pace of repayment that has a realistic chance of being adhered to on the part of the debtor. A decision on what is or isn’t realistic in each instance is down to the judgement of your Administrator but affordability is a key aspect of the equation as any DPP is put together.

If you need a break from paying your creditors back while you have a DAS in place then it is best to explain your situation and how you intend to resolve it to you DAS Approved Money Advisor. By doing so, you can arrange a break of up to six months should you meet the specified criteria, with that period then added to the intended end date for your agreement so you can catch up and complete the terms of your scheme. You are able to apply for more than one payment break should you circumstances require this.

If your levels of disposable income are significantly depleted or you have a change in circumstance then you will have a good case for applying for a variation in the However, if you simply fail to pay back money to your creditors as agreed then you will probably find that the agreement is terminated within a matter of a few months. If you miss three payments throughout the duration of your DAS this is grounds for revocation.

Under these circumstances, not only will you find that your creditors return to charging fees and interest on top of the amounts you owe them, but you could also see them retroactively imposed.

One of the foremost advantages of Debt Arrangement Schemes is that they enable individuals to pay back the debts they owe to creditors without having to forego ownership rights to assets of value. In that regard the schemes differ crucially from both Trust Deeds and sequestration, both of which are forms of insolvency and mean that a person has to try to find any means they can of paying back creditors.

It might not always be the case that with a Trust Deed or sequestration you have to sell your home or your car to satisfy your creditors but it is a very real possibility, which is not the case with a DAS. All which makes a DAS a much more appealing debt repayment solution for most people.

The timing, though, is important because when your debt problems reach a point of being totally unsustainable then you might find that entering a DAS is no longer an option.