Which debts can be included in a Debt Arrangement Scheme (DAS)?

The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy.

A Debt Arrangement Scheme (DAS) requires you to repay the entirety of your debts through a Debt Payment Programme (DPP) which is then divided amongst creditors by an approved payment distributor. The DPP will be produced after calculating essential expenditure such as utility bills, council tax and mortgage or rent payments. A DAS approved advisor will negotiate the arrangement between the debtor and creditors.

The repayment arrangement is largely made up of unsecured debts and selected secured debts. This is calculated against essential spending which goes towards priority debts.

Priority Debts - These are classed as essential payments to maintain the basic standard of living, such as shelter, heating, electricity and water. This also includes payments towards transport to travel to a workplace. If these payments cannot be included in your DPP, they will be added to your essential expenditure which will determine the calculation for your monthly lump sum payment. Priority debts include:

  • Mortgage
  • Rent
  • Council tax
  • Utility bills
  • Tax
  • Car finance, e.g. hire purchase
  • Student loan
  • Child support

Failure to repay priority debts can result in serious consequences. For example, if mortgage or car finance instalments are left unpaid, your home or car could be repossessed.

Unsecured Debts – Unsecured debt is not tied to equity or an asset so it cannot be repaid through the repossession of an item or property which represents the debt value. These can be factored into your repayment plan, and as a result, all interest and extra charges will be frozen, allowing you to repay the full amount by the end of the DAS. Unsecured debts include:

  • Personal Loans, including payday loans
  • Overdrafts
  • Credit cards
  • Store cards
  • Council tax arrears
  • Utility bill arrears

By entering into a DAS, you will be able to protect your credit record from further deteriorating. This is also a mechanism which will restrict creditors, such as the bank or lenders from sending notice letters and court orders, as they will be aware that you have agreed to a DAS to keep up with payments.

Secured Debt – A secured debt is tied to assets or equity which can be repossessed in the event of non-payment. The following are classed as secured debt:

  • Mortgages and remortgages
  • Car finance, including hire purchase
  • Finance on household appliances

In most cases, arrears for the above can be added to your DPP.

Which debts are exempt from a Debt Arrangement Scheme?

Student Loans - From June 2015, student loans were made exempt from a DAS. These are now automatically deducted from employee wages so they can no longer be accepted.

Hire Purchase – Your standard hire purchase payments cannot be included in a DAS, but you are able to include the arrears.

Child Support – This cannot be included in your DPP as the expense will only incur over a limited period of time. As a DAS can run over 10 years, your child would have matured and no longer require support services or maintenance by the end of the DAS period. A Debt Arrangement Scheme will allow you to make reasonable payments over a period lasting up to 12 years. In the meantime, you will be protected from court action and mounting fees. One of the flexible features of a DAS is that if your circumstance changes for the better, you are able to make a larger repayment without incurring fees. If you have to decrease the payment amount as your situation has changed, you will be able to apply for an adjustment.

Scotland Debt Solutions has been assisting Scottish residents since 1989. We are debt experts and can discuss the best solution for you. Please contact a member of our team to arrange a free same-day meeting in one of our four offices in Scotland, or a location of your choice.

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FAQ

Are any debts excluded from DAS?

Debts that will not form part of your Debt Payment Programme include: Some secured loans Student loans Court fines

Does DAS provide protection from creditors?

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.

How does the Debt Arrangement Scheme work?

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.

How long does a DAS last?

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.

What are the advantages of a Debt Arrangement Scheme?

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

What are the disadvantages of DAS?

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.

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