Reviewed 5th December 2019
Debt payment programmes are a fundamental part of the Debt Arrangement Scheme (DAS) in Scotland, and allow you to repay over a longer period of time.
These programmes involve repayment of your debts in full, and are arranged by a DAS-approved money adviser or licensed insolvency practitioner. If you’re eligible, all interest and charges on your debts will be frozen, and you benefit from a respite from creditor pressure. So how do you apply for a debt payment programme, and what impact could it have on your debt situation?
If you’re a resident of Scotland, you owe more than one debt, and are able to repay the money from surplus income, a debt payment programme may be a suitable option. Initially, you’ll need to contact a money adviser approved by the Accountant in Bankruptcy (AiB), to formally establish your eligibility. You can find a directory of approved DAS advisers on the Scotland’s Financial Health Service website, and also on the DAS Scotland website. Once you’ve made contact and arranged a meeting, you should gather together all your relevant financial documentation. This could include bank and credit card statements, personal loan agreements, and any other key information that could help the adviser establish your eligibility. It’s advisable to produce as much information on your financial situation as possible, as it’s possible that other options may be more suitable.
If DAS is appropriate for your circumstances, the adviser will calculate an affordable monthly repayment amount and decide how long the plan should last. They then make a formal proposal to your creditors, who must either accept or reject within 21 days. If they don’t respond, it’s assumed that they agree the terms. It’s worth knowing that if a creditor doesn’t approve the proposal, the plan can be put through if the money adviser believes it to be fair and reasonable. Once the proposed DPP has been accepted, the interest and additional charges on your debts will be frozen as long as you abide by the DPP terms.
One major aspect of entering into a debt payment plan is that you must have surplus income available each month to repay creditors. Your essential living expenses, such as mortgage, rent, heating and food bills will be taken into account, and the remainder divided between creditors at the agreed rate. You’ll also need to consider the potential duration of a DPP. It should be completed in a ‘reasonable’ timeframe, but your money adviser will be able to guide you on this. Scotland Debt Solutions has been working on behalf of Scottish residents in debt since 1989. Our expert team can provide more information on debt payment plans, and establish whether they represent the best option for you. Call us to arrange a free same-day meeting at one of four offices around Scotland.
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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.