What are the pros and cons of a Debt Arrangement Scheme (DAS)?

The Debt Arrangement Scheme, or DAS, is a government-backed procedure designed to offer residents of Scotland who are dealing with escalating debt, the chance to fully repay their debts through a series of affordable instalments rather than declare full insolvency. Every type of debt solution has its benefits and drawbacks, so let’s have a look at some of the advantages and disadvantages of a DAS.

What are the advantages of the Debt Arrangement Scheme (DAS)?

Payments are affordable

You can repay your creditors at a rate that’s affordable to you, with repayments being calculated after priority payments such as your mortgage and utility bills have been accounted for. This provides you with a budget for living, and helps to prevent your financial situation from worsening.

Debt payment plans are flexible

It’s common for debtors’ circumstances to change during the course of a Debt Arrangement Scheme, but DAS is flexible so if your income falls, repayment amounts can be adjusted to prevent the agreement failing.

Protection from creditors

Creditors have various methods of enforcement action available to them in Scotland, but DAS offers you protection from these forms of legal action. They could include earnings arrestment, an attachment order for goods outside the home, or enforced bankruptcy. If you are under a DAS, you do not need to worry about this type of legal action. This type of protection is a valuable advantage in helping you escape debt, as long as you continue to meet the terms of the arrangement.

Disadvantages of the Debt Arrangement Scheme

Debts aren’t written off

One of the main features of the Debt Arrangement Scheme is that creditors are repaid in full. No debt is written off at the end of the agreement, which means the agreement you sign up to can last a long time depending on the amount of your debts and how much money you have to put towards repaying them.

Can take a long time to repay

As all debts are repaid in full, it can take several years or more to complete a DAS. This obviously depends on your individual circumstances, such as your level of debt and monthly income, but the arrangement can last much longer than other formal debt solutions such as a Trust Deed or Sequestration.

Negatively affects your credit rating

Entering into a Debt Arrangement Scheme adversely affects your credit file. It remains on your credit record for six years, and can make obtaining credit or further borrowing difficult during this time and beyond.

You need to owe more than one debt

One of the eligibility requirements for DAS is that you have more than one debt. This means that if a single creditor is owed a large amount, you’ll be ineligible for the scheme and may have to consider alternative options.

If you would like to find out more about the Debt Arrangement Scheme and how it could help you escape debt, Scotland Debt Solutions are here to provide professional advice and guidance. We specialise in helping Scottish residents out of debt, and can offer free help and advice on your options.