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What is a Debt Arrangement Scheme?
The Debt Arrangement Scheme (DAS) is watched by the Scottish Government and an official way to get yourself out of debt. One tool included within this scheme is the Debt Payment Programme (DPP), which allows you to set one monthly repayment for your debts that is affordable for your current situation.
Those who live outside of Scotland, even in the UK, cannot take advantage of this scheme. However, there are other debt management plans available. These other debt management plans do come with fees and risks that aren’t found in the DAS.
Who Will the DPP Work For?
The DPP is great for those who:
- Live in Scotland
- Have money available after paying necessary outgoings
- Owe money to at least one creditor
The DPP is created so you have one affordable repayment each month. The money you pay then goes to your individual creditors, with a small percent taken to cover the running costs of the DAS. Between 2% and 8% is given to the Accountant in Bankruptcy for overseeing the scheme for the Government.
You can set any amount you want for the repayment, as long as you will repay the full loan within a reasonable timeframe. If you can’t do it reasonably, then you will need to look for other debt solutions. You may need to go through sequestration, which is bankruptcy in Scotland.
Set Up a Debt Arrangement Scene (DAS) DPP
A DAS approved money advisor will help with the setting up and management of your DPP. The advisor has to be approved to be able to help and will go through full training to make sure the best plan is created for you.
Once the DPP is approved as being right for you, the scheme will put a proposal forward and allow your creditors to agree or disagree to it. Creditors have 21 days. Don’t panic if the creditors don’t agree, as the DAS Administrator can still approve your DPP if it is believed to be reasonable.
Once the DPP has been approved, you have one monthly payment to make. That payment will be divided up for you across your creditors, who will all be unsecured debt creditors.
We can set up your DPP completely free if it turns out that it is the best option for your financial situation.
Understanding the DAS Register
Once you apply for the DPP, you will be included on the DAS register. Anybody has access to this, and it includes all information about the person applying for or currently involved in a DPP.
Steps Your Creditors Have to Take After Arranging a DPP
As soon as the DPP is approved (whether by creditors or the DAS Administration), your creditors have to take the following steps:
- Freeze any and all interest
- Stop any charges on your account
- Stop any and all court/enforcement action
- Stop any and all letters for payments
When Your Situation Changes While on a DPP
There are times that your situation will change, for better or worse. You can apply for payments to change when this is the case. The DAS Administrator will look at the changes and how they impact the creditors and yourself. It is up to the Administrator whether the changes will be applied or not.
It is also possible to apply for a “payment holiday.” This is the case if you have an “income shock” and your disposable income has reduced by 50% or more. Income shocks include:
- Changing jobs/unemployment
- Maternity/Paternity Leave
- Ill health affecting working capabilities
You can have up to six months off the payments during your payment holiday. There are no fees involved with taking the payment holiday, but it will add six extra months to clear your full debt.
The Cost of the DPP
Some third parties will charge fees for the creation of the DPP. We do it all free of charge.
Once your DPP is approved, we will take a 10% cut out of your payments to cover the costs of managing your payment plan. This is a lawful amount that we can take, and your creditors will write this amount off from the debt that you owe. We charge no other fees for anything involved in your DPP.
Ending the DPP
Your DPP will come to an end in the following circumstances:
- All agreed payments have been made
- A lump sum payment clears the debt
- Creditors and the original DPP agree to end everything
You will not be liable for any other payments when any of the three above take place. You will also be debt free.