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Changes to the Scottish Debt Arrangement Scheme

Originally launched in 2004, the Scottish Debt Arrangement Scheme (DAS), is a formal debt solution. It is a repayment plan that enables someone in debt to combine all their monthly outgoings into one singular payment, regardless of how many debts they may have. Once someone is in a DAS they don’t need to worry about, Sheriff Officerswage arrestments or their bank account being frozen. In addition to this, all interest and charges are frozen and creditors can’t make people bankrupt: enabling you to focus on your debt repayment.

So what’s new?

From the 4th of November, the scheme will be entirely FREE for everyone who uses it, even if they are applying through a private firm such as ourselves. The associated costs will now be funded by the creditors, meaning that 100% of the money will go towards reducing your  debts.

Furthermore, applications will be automatically approved, even if some creditors object to the proposal. In the case that a creditor is owed more than 10% of the total debt level, the case will be referred to the Debt Arrangement Scheme Administrator – an impartial and independent body that will decide whether the proposal is fair and reasonable. Currently only 4% of all proposals are not approved automatically or by the DAS Administrator.

Another addition to the scheme will be payment breaks. This allows for contingencies to be managed without being released from the scheme. Someone in a DAS will now be able to ask their money advisor for a maximum of 2 months payment break per year for financial relief in emergencies. If someone’s inability to meet the payments lasts longer, they are still able to request a longer payment break of up to 6 months without losing protection, but this is not guaranteed.

It will also be easier to modify the monthly payments so long as the amount is still ‘fair and reasonable’.

So What is Fair and Reasonable?

There is no maximum time limit on a DAS but a general rule of thumb is that if the scheme will complete in less than 10 years, it will stand a good chance of being approved as fair and reasonable. Although every application is assessed on a case by case basis.  At present the average DAS lasts 6.8 years.