What Is The Debt Arrangement Scheme?

 

The Debt Arrangement Scheme is also known as DAS. It enables people to repay their debts at the rate they can afford. It provides legal protection from creditors and freezes interest.

 

The legal protection is useful for many home owners. Frozen interest helps to repay the debts sooner.

 

DAS is similar to a debt management plan, but provides further protection. You can use it if you live in Scotland. DAS isn't personal insolvency, so it doesn't involve your assets.

 

Who Qualifies For DAS?

 

If you can pay something to your creditors, DAS might help you. You must be able to pay the full debt in a fair time period. For example, repaying £9,600 at £200 per month would take 4 years. If your DAS would be too long, another debt solution may be better.

 

You cannot use the debt arrangement scheme if:

 

• You are bankrupt.

• You're in a trust deed.

• You're subject to a "Bankruptcy Restriction Undertaking".

 

How Does DAS Work?

 

You need to contact an Approved Money Adviser. This could be an "insolvency practitioner". It could be a free advice service.

 

The adviser you checks your money status. They find out your income, bills, and other costs. They work out the amount you can afford to pay.

 

Your adviser can apply for your DAS. The details get sent to your creditors. The creditors check the offer of repayment. They decide whether to agree or reject your payment plan.

 

If all creditors agree, the scheme becomes binding. Any creditor that fails to respond is deemed to have agreed.

 

A system exists to deal with creditors that reject without good reason. It is possible that your DAS application may be rejected.

 

Joint Debt Arrangement Schemes

 

Most couples with debts qualify for a joint DAS.

 

It may be that one of you is better off using a different solution. You don't have to deal with your debts jointly.

 

Pros of DAS

 

• Protection from unsecured creditor legal action.

• Your included creditors cannot make you bankrupt.

• Interest will stop provided you stick to the agreement.

• Creditor pressure reduces. Your adviser deals with them.

• Your assets are not taken into account.

• The arrangement is flexible. If your situation changes, the plan can change.

• If needed, a payment break is possible.

 

Cons of DAS

 

• The repayment term may be long.

• Debts aren't written-off.

• New debts (after DAS begins) are not included.

• A decline in your credit rating.

• No borrowing without consent.

• Interest can be added to the debts if you break the agreement.

• Entry on the public register of Debt Arrangement Schemes.

• You will fall into arrears at the start. Arrears will increase.

• If it fails, you are liable for the debt owed.

• You will have a limited budget during the plan.

 

Debt Arrangement Scheme Fees

 

You can obtain DAS for free. Citizens Advice or your Local Authority can often help.

 

Other advisers will charge fees. This includes insolvency practitioners.

 

Summary

 

DAS helps people to repay their debts at a rate that they can afford.

 

It provides further protection than a debt management plan.  It stops interest. Unlike a trust deed or bankruptcy, assets get ignored.

 

If your debts are large, this option may run for too long. A plan in excess of 10 years, or beyond retirement, might be unsuitable.

 

Bright Oak is not a direct provider of DAS services. We work with our partners, Wylie & Bisset LLP.

 

For further information, contact our debt experts.

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