What is a Debt Payment Plan under DAS?
A DPP is a Debt Payment Plan and the law which governs a Debt Payment Plan in Scotland is The Debt Arrangement Scheme (Scotland) (DAS) regulations and it’s a statutory debt management scheme, introduced by the Scottish Government, to help you to repay your debts.
A DPP under DAS is the only official government debt management scheme in Scotland. A DPP:
- Allows you to pay off your debt(s) over time.
- Will take into account what you can reasonably afford to pay back to those you owe money to.
- There’s no limit on the level of debt or the repayment period in a DPP; it can last for any reasonable amount of time, dependent on the amount of debt you owe.
- Allows you to make one regular payment towards clearing your debts.
- Provides protection from creditors taking enforcement action to recover money you owe them (once Approved).
- Freezes interest, fees and charges on your debt, from the date of the application, to your creditors until the completion of your repayments.
Am I eligible?
You could be eligible to participate in a DPP under DAS if you have one or more debts and meet the following criteria:
- You live in Scotland.
- You have sought the advice of a DAS Approved Money Adviser.
- You have a reasonable surplus income after meeting your basic needs – mortgage, rent, utilities, food, council tax etc.
You can’t participate in DAS if you:
- Have granted a Protected Trust Deed that you’ve not been discharged from.
- Are bankrupt and your Trustee hasn’t been discharged.
- Are subject to a Bankruptcy Restrictions Order or a Bankruptcy Restriction Undertaking.
Benefits
Reduced or stopped contact from creditors
The unsecured creditors who agreed to the terms of your DAS cannot take any further action for recovery of their debt once your DAS is agreed.
The duration of your DAS will depend upon the level of your debt and the amount you can reasonable afford to repay to your creditors.
As an example, if you owe £7,000.00 and can afford £100.00 per month towards your debts, the DPP will last 70 months (£7,000.00 / £100.00 per month = 70 months [duration of the DPP]).
Only pay what’s affordable
Your income and expenditure is assessed against agreed guidelines called the Common Financial Statement and Scottish Debt Help’s dedicated team will help you to understand and to explain what you can and can’t include in your budget.
Property in a DPP
If you own your own home, rest assured. Your home is not included in your DAS. Just keep paying your mortgage as you would each month.
Employment
If you’re self-employed typically you can carry on trading without disruption to your business.
If you own a company or you are a sole trader, you can still carry on trading.
Considerations
It will affect your credit rating
A DAS will affect your credit rating. Unfortunately, there’s no way to avoid this, although it’s likely your credit record is already being affected if you’ve missed payments on your debts. You may also struggle to source credit during the period of your DAS and there are restrictions on obtaining credit, as well.
Your lenders can also choose not to approve your DAS. However, if they do, your DPP will be automatically referred to the Scottish Government for a ‘Fair and Reasonable’ test. All this means is that the Scottish Government will look at the DPP and make an objective assessment of the DPP and determine whether to over-ride the objections(s) received.
Only unsecured debts are covered
Only unsecured debts are covered by a DAS, so any loans secured on your home or through hire purchase agreements aren’t covered and you would continue to pay these.
Don’t miss a payment
If you fail to make a payment under your DAS agreement without first applying for a variation (via your Money Advisor), you may find the DAS could be revoked and you won’t then be able to be discharged from your debts. It’s sometimes possible to arrange payment holidays, or to extend the timeframe of your DAS and you should contact your Continuing Money Advisor in the first instance to discuss such matters.
Debt Arrangement Scheme FAQs
What’s the difference between a DAS and a Trust Deed?
You must have at least £5,000 of debt for a Trust deed, DAS has no minimum debt level.
You’ll pay a DAS until all debts are clear, whereas in a Trust Deed, you can be granted debt forgiveness. Any remaining debt is written off after the DAS is completed.
What debts are included?
You can include all unsecured debts along with rent/arrears.
Is my owned home affected?
No, your home isn’t included in a DAS. If you have equity in your home, it may be worth considering alternative methods of raising funds against your property to reduce your debts.
