It allows debtors to repay monies owed in full without threats of legal action from creditors.
The legislation made it compulsory for debtors in Scotland to receive money advice from professional advisors, whose job it is to establish the most appropriate debt relief product using Scotland’s ‘Common Financial Tool.’
Advisors adhere to the same financial calculations and criteria when dealing with all debtors, and if DAS is found to be the best way forward, a manageable repayment amount will be decided upon.
Scottish residents with personal unsecured debt they are struggling to repay are eligible to apply. They need to commit to making regular payments until the debt is repaid in full as DAS is not a route into insolvency, it is a way to regain control of a poor financial situation. Debtors in Scotland who are currently bankrupt or in an active Trust Deed are not eligible. Nor are people unlikely to repay their debts in full, even if given this extended repayment time.
An approved money advisor must provide advice to debtors before they apply for any formal debt help in Scotland. An advisor will review the debtor’s income, assets and debts to let them know the most appropriate route. They will then guide the application process, formulate a Statement of Affairs which covers the debtor’s financial position, and send it to the Accountant in Bankruptcy along with the application form.
Unsecured debts will form the major part of a DPP. Unsecured debt generally includes personal loans, bank overdrafts, payday loans and credit card borrowing. A 2013 amendment to the Debt Arrangement Scheme (Scotland) Regulations 2011, now allows for mortgage arrears to be included in a Debt Payment Programme. Debts that are omitted include student loans and court fines.
Repayment calculations are based on the amount of residual income after household bills have been met. These include mortgage or rent payments, food, utility bills, clothing, council tax, and other essential bills.
There is no specific timescale for a DPP – it depends on individual circumstances, and could run for around eight years or more depending on the levels of debt and repayment amounts.
Agreement to the Debt Payment Programme needs to be obtained from all creditors, although in some cases the Accountant in Bankruptcy has the power to overrule creditors and pass the DPP regardless.
One requirement of entering a Debt Arrangement Scheme is the inclusion of your DPP in the public DAS Register. This means that your financial situation is no longer private, as the online register can be accessed free of charge by members of the public. Details held include your full name, date of birth, home address and any business addresses.
Failing to make at least three agreed payments on time can lead to a revocation of the Debt Payment Programme. This would enable creditors to take legal action against you, and potentially backdate all interest and charges. A revocation may also occur if you subsequently apply for your own sequestration.
Debts that will not form part of your Debt Payment Programme include: Some secured loans Student loans Court fines
Yes, this is one of the reasons why the Scottish government introduced the scheme. As long as payments set out in the Debt Payment Programme are met, creditors will not be able to make contact or take legal action against you. All correspondence is dealt with by your DAS Approved Advisor.
A DAS Approved Advisor reviews your income, assets and liabilities to make sure it is the right product for you. A Debt Payment Programme is then drawn up which takes into account your household expenses such as rent, food and utilities, and sets out how much you need to pay against your debts each month, and for how long. This ensures that your living expenses are covered, and that debts are consolidated into a single affordable payment.
There is no specified timescale for completion of a Debt Payment Programme, as each case is unique and depends on your financial situation. There is flexibility built into the scheme if your circumstances alter, however.
You have more time to pay off your debts Interest and fees are frozen once a Debt Payment Programme has been agreed Your creditors are not able to take any further legal action Debts are consolidated into a single payment that you know is affordable because your financial situation has already been reviewed by a professional money advisor Escalating debts are halted, providing some relief from stress You can avoid full insolvency as you will still be paying your debts in full
The Debt Arrangement Scheme, like any debt management product, may affect your credit rating. If you enter into a DAS then your details will be recorded on the DAS register. This is a register which can be accessed free of charge. Creditors and credit reference agencies check this register on a regular basis and may update your credit file to reflect this information. While you have a Debt Payment Programme under DAS, you will not normally be able to access additional credit. There are exemptions to this which your money adviser can further explain.
Our Scottish based team can help advise you on your debt problems.
If you’re a Scottish resident struggling with personal debts, there are a number of solutions available to you that can appease your creditors and put you on the path to financial recovery.