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Debt Arrangement Schemes: A brief guide

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What is the Debt Arrangement Scheme?

 

The Debt Arrangement Scheme (DAS) is a legal scheme run by the Scottish Government. It will give you time to pay off your debts over a reasonable length of time through a ‘debt-payment programme’.

• Whilst a debt-payment programme is in place, all interest, fees and charges on your debt will be frozen from the date that you apply.

• As long as you fully complete the debt-payment programme and pay off your debts, the frozen interest, fees and charges will be written off.

DAS can also give you protection from creditors making you bankrupt, or using court action against you to enforce your debts. Enforcing a debt through the courts is often known as ‘diligence’.

Even if some of your creditors have started to use court action against you, in most cases joining DAS will stop this action from going any further.

 

What are the advantages of the Debt Arranagement Scheme?

• You will get time to repay your debts over a reasonable period.

• You will only have to make a single regular monthly payment. This is paid to an ‘approved payment distributor’ who will send the money to your creditors for you.

• DAS is normally free.

• Joining DAS will protect you from most creditors using court action to recover their debt.

• DAS is flexible and if your circumstances change you may be able to vary your debt-payment programme to make it more affordable, or even pay it off more quickly if your situation has improved.

• If you have a sudden and short-term drop in your income of 50% or more, you may be able to arrange a payment holiday of up to six months, until your circumstances improve.

• Interest, fees and charges are frozen from the date you apply for a debt-payment programme and are written off completely when it is completed.

• If you have made payments for 12 years and have paid 70% of your debts, you may be able to end the DAS early. This is called a composition.

 

Who is eligible to join DAS?

You can apply to join DAS either as an individual or as a couple, as long as:

• you have one or more debts;

• you live in Scotland;

• you have a reasonable amount of money left over after you have taken account of your essential expenditure; and

• you have had advice and assistance from an approved money adviser.

 

Applying to join DAS as a couple

If you want to apply as a couple for a joint debt- payment plan, you must both agree to the debt-payment programme proposal.

You will be treated as a couple if:

• you are husband and wife;

• you are living together as husband and wife;

• you are civil partners; or

• you are living together as if you are a husband and wife relationship, except that you are the same sex.

 

Who is not eligible to join DAS?

You will not be able to join DAS if:

• you do not have a reasonable amount of money available to pay into a debt-payment programme;

• you are in a protected trust deed;

• you are bankrupt;

• you are subject to a bankruptcy restrictions order or a bankruptcy restrictions undertaking; or

• you are paying debts under a conjoined arrestment order (this is an order from the court combining two or more arrestment orders). The rules about conjoined arrestment orders are complicated - although there is a general rule which stops you having a debt-payment programme when you have a conjoined arrestment order, you may still be able to have one in certain circumstances. If any of your creditors tries to take legal action to enforce a debt that is not included in the conjoined arrestment order, you may still be eligible for a debt-payment programme.

 

How do I apply to join DAS?

If you think that DAS might be the best option to help you with your debts, you need to get help from an approved money adviser. Approved money advisers have been authorised by the Accountant in Bankruptcy (AiB) to apply for debt-payment programmes through DAS.The first thing that an approved money adviser will do is to look at all your circumstances and help you to decide on the best debt option for you. There is a register of approved money advisers on the DAS website http://www.dasscotland.gov.uk.

 

Will I be charged a fee to join DAS?

Approved money advisers working for citizens advice bureaux, independent advice centres and local councils will not charge you for their advice, or for preparing your debt-payment programme application. Companies may say that they can help with a DAS application, but they are not approved money advisers. If you are contacted by a company offering to help you with DAS, or any other option to help you clear your debts, remember that there are lots of organisations that will give you this help for free. For approved money advisers check the DAS website http://www.dasscotland.gov.uk. Some companies in the private sector have also been authorised as approved money advisers and may charge you. You can check if there is a fee on the approved money adviser register. You would have to pay this fee because it cannot be included in the DAS. Also, before you enter into any agreement with a fee-charging money adviser, the company must follow detailed rules to ensure that they have told you that free money advice is available and where you can get it from.

 

What happens next?

Once you have found an approved money adviser and decided that a DAS debt-payment programme is your best option, your approved money adviser will take you through the following steps.

These involve checking:

• your income, to make sure you are claiming all the benefits and tax credits that you can;

• your essential outgoings;

• your surplus income (what is left to pay your creditors after your essential outgoings);

• your priority debts;

• how much you have left after paying your priority debts; and

• how much your credit debts are.

In order to do this, your approved money adviser will:

• list all of your debts; and

• check the amounts you owe to all your creditors.

Your approved money adviser will also:

• contact your creditors if necessary; and

• prepare and submit your application for a debt-payment programme.

 

What if my creditors are threatening enforcement action?

It can take a little bit of time for your approved money adviser to get all the information that they need to be ready to apply for your debt-payment programme.

 

In the meantime, your adviser can contact the AiB and confirm that you are intending to apply for a debt-payment programme. This is called an ‘intimation’. Your intimation will then be placed on the DAS register.

Once on the register, you will be protected against any creditor action for six weeks and this will give your adviser time to submit your proposal.

 

What happens after my application is made?

Once the DAS Administrator receives your application for a debt-payment programme, you are protected against any creditor action to enforce their debt. This protection will only stop if you withdraw your application, or if it is rejected or cancelled (‘revoked’) by the DAS Administrator.

 

All creditors who are named on your debt-payment programme proposal will be sent a copy. They will be asked if they agree to your proposal and, if they do not, are asked to give reasons why not. If a creditor does not respond to this request within 21 days, the DAS Administrator will treat them as if they have agreed to your payment proposal and they will be bound by it.

 

What if a creditor objects?

If one or more of your creditors do not agree with the debt-payment programme, they will tell the DAS Administrator. Even if a creditor has objected, the DAS Administrator can still approve your debt-payment programme by using the ‘Fair and Reasonable’ test. This means that the DAS Administrator will decide whether to approve or to reject your application by taking into account:

• the total amount of your debt;

• how long your proposed debt-payment programme will take;

• how you are proposing to pay and how often you are proposing to make payments;

• how many other creditors have objected;

• any comments that either you or your approved money adviser have made;

• any previous debt-payment proposals that you may have made; and

• anything else that they think they should take into account.

programme.

 

What is a continuing money adviser?

Some approved money advisers will charge you a fee for providing advice and services. These fee-charging approved money advisers are sometimes called ‘continuing money advisers’.

 

If you have agreed in writing to pay a fee to a continuing money adviser, the way that they manage your debt-payment programme is different to the way that approved advisers who offer free advice will operate.

Both types of money adviser will complete the application form and send it to the DAS Administrator for approval in the same way. However, once your proposal has been approved, the administration of the debt-payment programme is different.

• If you are using an approved money adviser from a free advice agency, the DAS Administrator becomes responsible for the administration of your debt-payment programme.

• If you are using a fee-charging approved adviser, the administration of your debt-payment programme will stay with the fee-charging money adviser.

 

What happens if my proposal is rejected?

If your proposal is rejected, you should get in contact with your money adviser to talk about your options. For example, it may be possible to change your proposed debt-payment programme to make it more likely that your creditors or the DAS Administrator will agree to it.

 

You can ask the DAS Administrator to review their decision. Your money adviser may be able to help you to do this. You have 14 days from the date of the decision to write to the DAS Administrator to ask for a review. They will write back and confirm that your application has been received. The DAS Administrator may decide to:

• keep the same decision as before;

• alter the decision; or

• remove (‘revoke’) the decision and replace it with a new one.

 

They will write to tell you the result of the review within 28 days.

 

If you think that the DAS Administrator has not applied the law correctly either in their original decision or in the review, you can appeal to the sheriff court. Your money adviser can tell you if this is the case.

You have 14 days to register your appeal at the sheriff court from the date of the decision by the DAS Administrator.

 

What happens if my circumstances change?

If you cannot keep to the payments on your debt-payment programme because your circumstances change, you should apply to vary it before it is cancelled. You have two options:

• a payment holiday; or

• a variation.

Discuss these with your money adviser to see which is best for you.

Discuss these with your money adviser to see which is best for you.

 

Applying for a payment holiday

If the money that you have available to pay into your debt-payment programme suddenly goes down by half, or even more than that, you may be able to apply for up to a six-month payment holiday to help you to sort things out. The DAS Administrator can agree to a payment holiday if:

• you become unemployed;

• your employment changes;

• you go on maternity leave, paternity leave or adoption leave;

• you take time off work to care for a dependant;

• you become ill;

• you go through a divorce, end a civil partnership, or go through a separation; or

• you share financial responsibility or another kind of care with a person who has died.

 

To apply for a payment holiday you should write a letter to the DAS Administrator, with a copy of your personal budget, explaining how your situation has changed. Alternatively, you could ask your money adviser to do this for you.

Since the payment holiday will temporarily stop your payments, you will have to carry them on for the same amount of time after the date they would otherwise have stopped.

 

You can apply for a payment holiday each time you meet the requirements. There is no limit to the number of times that you can apply. The DAS Administrator will take account of any previous payment holidays you have had when they make their decision.

Applying for a variation

 

If your situation changes permanently, you might want to apply for a variation rather than a payment holiday, to make the payments more manageable in the future. To apply for a variation you should write a letter to the DAS Administrator, with a copy of your personal budget, explaining how your situation has changed. Alternatively, you could ask your money adviser to do this for you.

 

The DAS Administrator will usually only agree to a variation in one of the following situations.

• All parties to the debt-payment programme agree that it should be varied.

• You have a significant change in your financial circumstances, such as your income going up or down.

• Both you and your creditor agree that there is no longer a debt to be repaid.

• When the debt-payment programme was made a debt was missed out, or forgotten about.

• A debt that you could not put a figure on at the time you made the debt-payment programme application has become a fixed amount that you now owe.

• You need credit to pay for emergency repairs, funeral costs or something like this.

• You have been given a payment holiday.

• A creditor reduces your debt by offsetting some money that they owe to you against your debt.

 

When a creditor owes you money and they offset this against the debt that you owe them, it reduces the amount of your debt. If a creditor does this whilst you are in the debt-payment programme, the DAS Administrator will try to get you and the creditor to agree to a variation. If the creditor will not agree, the DAS Administrator can propose the variation if they think it should happen.

 

If you need to vary your debt-payment programme and your situation is different, you may still be able to get a variation. You should discuss your situation with your money adviser, because you may want them to help you to apply.

 

How will the DAS Administrator deal with my request?

The DAS Administrator will look at your request and take into account your views, the creditor's and money adviser's views, as well as any other relevant factors. They will either agree to a variation, or not, and write to all parties to inform them of their reasons for their decision.

 

Are there any debts that cannot be included in a DAS?

In theory, any debt can be included in a debt-payment programme; but, in practice, some debts do not get included because the creditor has other means of getting their money. The three most common situations where this will happen are:

• when you have hire purchase or conditional sale arrears;

• when you have arrears of child support; or

• when debts are being deducted directly from your benefits.

 

Hire purchase or conditional sale arrears

If you have hire-purchase or conditional-sale arrears, only the arrears would be included within your debt-payment programme. Your creditor would still be able to take court action to repossess the goods if you do not pay the ongoing payments as they become payable. Because of this, it would be better to reach an agreement about the repayment of these arrears before you apply to have a debt-payment programme. That way you would know whether you still have enough money afterwards to make a realistic application.

 

Child support arrears

If you have child support arrears, your approved money adviser will talk to you about prioritising these payments, because you cannot be protected from enforcement of arrears by a debt-payment programme. You will need to arrange to pay child support arrears as part of your essential spending.

 

Debt collected directly from benefit

If you receive certain types of benefit, the Department for Work and Pensions can arrange to deduct some kinds of debts directly from your benefit before you receive it. For example, direct deductions from your benefit can be made for council tax arrears, fines, a short-term advance, a budgeting loan, a budgeting advance and benefit overpayments.

However, debt-payment programmes are usually not a good option for someone who is on a very low income such as a social security benefit. Speak to your money adviser about whether a debt-payment programme is a realistic option if you start to claim social security benefits.

 

What about mortgage or rent arrears?

If you have mortgage or rent arrears, you can still apply for a debt-repayment programme and you can include your arrears in the debt-repayment programme. But this will not always stop your mortgage lender or landlord from taking repossession action if you are behind with your payments.

 

Having your mortgage or rent arrears included in a DAS may make repossession less likely, but you will need to keep making your regular mortgage or rent payments.

 

If you have included your mortgage or rent arrears in a DAS debt-payment programme, but your lender still starts possession procedure, the court will take this into account when deciding the case. Also, one of the factors the court must consider, when deciding if it is reasonable in all the circumstances to allow eviction to go ahead, is whether you are in a debt-payment programme. It is important that you keep up your regular mortgage or rent payments whilst you are in a debt-payment programme. If you start to fall behind with these payments once you are in a debt-payment programme, speak to your money adviser.

 

What happens if I miss payments on my debt-payment programme?

If you miss payments, or make part-payments, so that your arrears add up to the value of two months' payments and another one is due, your debt-payment programme may be revoked by the DAS Administrator. They can also revoke it if:

• you do not keep to a condition which is part of your debt-payment programme;

• you have not told the truth when applying for your debt-payment programme or when making an application for a variation;

• a creditor petitions for you to be made bankrupt before the debt-payment programme is approved and the court makes you bankrupt;

• you are in a joint debt-payment programme and have separated from your partner; or

• you die, or one of you in a joint debt-payment programme dies.

• The DAS Administrator will contact you and the other parties to the debt-payment programme if they intend to revoke it. If you do not respond and the debt-payment programme is revoked, your creditors cannot take action against you for 14 days from the date of the decision to revoke.

• You must act quickly if you want to stop your debt-payment programme from being revoked. Let the DAS Administrator know about your circumstances and why you want to keep your debt-payment programme. You may want your money adviser to help you do this. In this case you have 28 days from the date you contact the DAS Administrator before your creditors can take action against you.

• When deciding whether or not to revoke the debt-payment programme, the DAS Administrator will take into account the rules and also the circumstances around how you have broken them. They will look at any other factors, including whether or not your debt-payment programme is likely to be successful.

• If your debt-payment programme is revoked, your creditors will be able to take action against you again. Also, your creditors can ask you to pay the interest and charges that would have been payable if you had not started the debt-payment programme.

 

Can I take out further credit?

You are not supposed to take out further credit whilst you are in a debt-payment programme, unless one of the following special circumstances applies to you.

• Your credit is approved by the DAS Administrator and your debt-payment programme is varied to help you to repay the extra credit.

• You need credit for emergency repairs to your home.

• You need credit because you are responsible for reasonable funeral expenses.

• Your credit was taken out before you joined DAS and was part of cyclical loan agreement.

• You incur a trade debt in the ordinary course of business.

 

You must notify the creditor if you are in a debt- payment programme and you get credit due to one of the circumstances listed above. You will be expected to pay this at the agreed contracted rate. Your debt-payment programme may be varied to take this into account. A short-term advance, a budgeting loan or a budgeting advance from the Department for Work and Pensions is not treated as credit by DAS and you can apply as normal if you are on certain benefits.

What is the DAS register?

 

The DAS register gives information about those who are applying for, or who have already got, a debt-payment programme.

 

This is a public access register which anyone can access free of charge.

• Creditors and credit reference agencies can check this register and may use this information to update your credit reference file to state that you have a debt-payment programme.

• The register will also say whether there has been any variation in the conditions of your debt-payment programme.

• It will include details of your name, age, address and the contact details for your approved money adviser.

 

Will DAS affect my credit rating?

Credit reference agencies check the DAS register regularly and may update your credit file to reflect that information. This is likely to affect your ability to take out further credit.

 

Can I end my payments early?

The DAS Administrator, or a fee-charging money adviser, can ask creditors to accept less than the full amount of the money that you owed them when you started the debt-payment programme. This is called offering a ‘composition’. If it is accepted by all your creditors, it will end your debt payment plan and you will have no more to pay.

An offer of composition can only take place after:

• you have paid 70% of the amount that you owed when the debt-payment programme started; and

• you have made payments for a full 12 years (not including any payment breaks).

 

The DAS Administrator will record which creditors agree to the offer of composition. If a creditor does not respond to the offer within 21 days, they will be added to those creditors who agree to the composition. If all creditors (including those creditors who do not respond) accept the offer of composition, the DAS Administrator will write to you to confirm that your debt-payment plan has ended. They will tell your creditors. The DAS Administrator will also tell your employer to stop taking money from your wages to pay the debt-payment programme, if it has been happening.

 

But, if all of your creditors do not agree to the offer, the DAS Administrator can still alter your debt-payment plan. They will take account of the agreements received and make a variation. The DAS Administrator will write to you to explain the details of the new variation.

 

What happens when I finish my debt-payment programme?

You have finished your debt-payment programme when:

• all your creditors have agreed to an offer of composition; or

• you have paid all the payments; or

• you make a lump-sum payment equal to all outstanding payments; or

• all creditors in your debt-payment programme agree in writing to complete it before the scheduled end.

 

Once this has happened, you cannot be held liable for any further payments towards the debts included in the debt-payment programme, or any further penalties, interest or charges. The DAS Administrator will remove your details from the DAS Register and tell your creditors that your debt has been repaid.

 

If you are repaying your debt-payment programme directly from your wages, the DAS Administrator or your money adviser will write to your employer, telling them to stop the deductions from your wages.

 

What if I have a complaint?

If you are unhappy with the way in which your debt-payment programme has been dealt with, you may have reasons for complaint about your approved money adviser or the DAS Administrator.

 

A complaint about your money adviser

If you feel that you have a complaint about your approved money adviser, you should make a complaint to the organisation that they work for. You can also make a complaint about your money adviser to the DAS Administrator. They have the power to cancel approved money adviser status if they feel that the adviser is unable to carry out the duties set out by the Scottish Government.

 

A complaint about the DAS Administrator

If you feel that you have a complaint about the DAS Administrator, you should follow the Accountant in Bankruptcy's complaints procedure. If you are still unhappy, you can complain to the Scottish Public Service Ombudsman.

 

This information only provides a brief overview, it should not be considered as Debt Arrangement Scheme advice. If you believe that a Debt Arrangement Scheme is likely to be the best option to help you with your debts it would be vital to seek impartial advice from one of the debt advice charities such as the Citizens Advice Bureau, ourselves or your local money advice office.

 

Click here to see our DAS fact sheet in full


For Free, Confidential and Independent advice: 0808 808 4000

Monday - Friday 9am to 9pm // Saturday 9.30am to 1pm // 24-hour voicemail. Please leave a message to request an information pack. http://www.nationaldebtline.org // http://www.mymoneysteps.org

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style="text-align:center;"> Please note that this topic has not had any new posts for the last 2019 days.

If you are trying to post a different story then you should start your own new thread. Posting on this thread is likely to mean that you won't get the help and advice that you need.

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