What is a debt arrangement scheme (DAS)?

Scottish citizens have a unique opportunity to gain special treatment for their debts through a structured payment programme. The Scottish Government allows for similar protection from creditors that a bankruptcy provides, but without the extreme negative consequences.

What is a DAS?

A debt arrangement scheme, or DAS is government-approved solution to extreme indebtedness. Scotland only endorses one debt arrangement scheme, and the DAS is the only approved source for taking advantage of the benefits offered through a Debt Payment Program (DPP).

The DPP is a structured framework for repaying defaulted debts over an extended timeframe. The purpose is to allow those who might be able to avoid bankruptcy to do so through the special terms offered through the plan. DAS offers special protections to clients who are admitted and choose to make payments through a DPP.

What are the benefits of a DAS?

Enrolling in a DAS does more than just help debtors avoid bankruptcy. It allows for the repayment of existing balances through more favourable terms. A DAS typically features common benefits that improve the chances of client success and creditor repayment. A few of the common benefits include:

• Admission into Debt Payment Program (DPP). Creditors are contacted on behalf of the client to request permission for DPP participation.
• Interest rates are frozen. Instead of chipping away at high balances as finances charges continue to accumulate, more progress can be made by allocating each payment in its entirety towards the debt.
• Fees and charges are stopped. Late fees and other charges no longer are added to the balance, making it easier to repay.
• Consolidated monthly payment. By virtue of a payment distributor, multiple creditors may be repaid through a single payment each billing cycle. The payment depends on disposable monthly income rather than the debt amounts.
• Fees and charges during DPP written off. Approved DAS enrollments mean that any charges stop from the date of original application to the scheme.
• Protection from creditors. Benefits shielding clients from court enforcement that are normally provided to bankruptcy clients are also provided to those in the DAS.
• Repayment period is flexible. A DPP may be approved for any reasonable period of time necessary to dispose of outstanding debt according to the ability of the client to repay.

How to Join DAS

An approved money advice service can facilitate enrollment into DAS. There is no fee for this service. While some solicitors also provide alternate plans for a fee, free enrollment is available through any approved money adviser.

A budget counselling session precedes enrollment. If the DAS is a recommended option, then proposals for a DPP arrangement are sent to creditors to request commonly approved benefits.

While the money adviser commonly files an intimation to creditors to notify a client’s intention to seek DAS protections, any debtor may file this request on their own if they choose. An automatic 6 week stay from legal action is a feature of the intimation, which could be crucial to a client facing insolvency and possible court action.

There is no cost to receive budget counselling or advice through the local Citizens Advice Bureau service. DAS participation also requires no fee. There are approved solicitors that may also provide access to the service but they will generally charge fees for their efforts. Creditors generally pay a small percentage from the monthly disbursement to cover the costs of the program so that clients may avoid having to cover fees they cannot afford.