Debt arrangement scheme

A Debt Payment Plan under the Debt Arrangement Scheme is a voluntary agreement with your creditors (the people you owe money to) to repay all of what you owe them.

The DAS will be set up for you and administered by an Approved Money Adviser who will usually either be a public sector employed Money Adviser or an Insolvency Practitioner. Insolvency practitioners are regulated by law and must be members of an approved governing body and also be authorised by the Financial Conduct Authority (FCA).

A DAS will normally include a contribution from your income for a set period of time and possibly additional payments in relation to your assets which you may choose to voluntarily include.

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Entering a DAS is a serious step – you must be sure that you understand what you are signing.
Before you sign, your Money Adviser must give you advice about the consequences of entering a DAS and provide information about the alternatives. The alternatives may include a Debt Management Plan, a Trust Deed, Sequestration or a full and final settlement with your creditors. The trustee must also give you a copy of the Scottish Government’s Debt Advice and Information Package and explain his/her fees before you sign anything.

You should be aware that Insolvency Practitioners will charge you a fee for acting as your Money Adviser while a public sector Money Adviser will not charge you a fee.

A DAS prevents you from applying for your own bankruptcy. If you take on any new debts after you sign the DAS, you will not be protected from legal action by your new creditors. Like bankruptcy, a DAS can affect your credit rating.

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Approved means that it is binding upon you and your unsecured creditors. This means that, provided you comply with the terms of your DAS, your creditors cannot take further action to recover the money you owe or make you bankrupt. Your secured creditors may, however, still take action to take possession of your home if you fall behind with your mortgage payments.

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When you sign a DAS deed your Money Adviser will:

• prepare a notice for publication in the DAS Register. This is a public record which anyone can access. This means that your DAS will come to the notice of organisations like banks and credit reference agencies;
• write to all your creditors and ask them to agree to your DAS; and
• if a sufficient proportion of your creditors agree to your DAS, your DAS becomes approved.

If your creditors object to your DAS there is the possibility of asking the Accountant in Bankruptcy to overrule your creditors.

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We will only write to your creditors to inform them of your DAS. There is no newspaper advert or courts involved nor will your employer be contacted. However, your DAS will be recorded on the public DAS Register which is normally scrutinised only by financial organisations but it is a public register.

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There is no specific statutory time limit. The duration is determined by dividing the total level of your debts by your monthly contribution. Your Money Adviser will explain this fully before you agree to anything.

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No. Your home does not form part of your DAS. However, you may voluntarily decide that you wish to contribute some/all of your house equity to your DAS in order to shorten its duration.

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Yes. Your car (like all your other assets) does not form part of your DAS.

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It’s safe. Your pension pot (like all your other assets) does not form part of your DAS. When setting what you must pay each month to your DAS your Money Adviser will normally allow reasonable monthly payment to your pension fund to continue.

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As a general rule, creditors will expect you to pay as much as you can afford each month as set by your Money Adviser and that the duration of your DAS isn’t excessive.

By agreeing to your DAS becoming approved, your creditors agree to its terms and they cannot take any further action to recover what you owe them, or to make you bankrupt.

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A public sector Money Adviser will not charge you a fee. An Insolvency Practitioner will charge you a fee for acting as your Money Adviser.

The Insolvency Practitioner’s fee is a matter to be agreed between the two of you before you decide to go ahead with your DAS.

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There is a small panel of organisations who will collect your monthly contribution and split it amongst all your creditors. The creditors pay for this service.

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The money needed to fund your DAS comes from your income. Your Money Adviser will advise on how much you should pay after allowing for what you need to live on each month. There is a standard approach to the calculation of income and expenditure.

It is important that you keep up repayments on your mortgage after signing a DAS, because a DAS will not prevent repossession if you fall behind on your mortgage.

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Your Money Adviser will reassess your contribution as and when your circumstances change, for example if you are made redundant, a child is born etc. If your income goes up, your Money Adviser will ask you to pay a higher contribution. If your income goes down, your Money Adviser will propose a reduction in your payments.

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At the end of your DAS, you will have repaid all the unsecured you had at the time you signed your DAS.

There are some debts that will not be covered by your DAS. These include:

• fines, penalties, compensation and forfeiture orders imposed by any court;
• debts taken out after signing your DAS;
• any liability due to fraud including benefit overpayments;
• any obligation to pay aliment;
• student loans; and
• money owed to someone who holds a security on your property, such as a mortgage or secured loan.

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A DAS is an agreement you entered into voluntarily and if you fail to keep your side of the agreement there are implications for you.

If you do not co-operate with your Money Adviser during the period of your DAS it may result in your DAS being revoked. Upon revocation your creditors would be able to back date all interest and charges and take legal action against you.

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If you are unhappy with your Money Adviser it is very important that you talk to them about your concerns.

All Insolvency Practitioners must be members of a Recognised Professional Body (RPB). (S)He will give you details of their RPB and you can contact them if you are unhappy with the way they have dealt with your DAS. Details of their RPB should also be on their headed letters.

You should raise your concerns with your Money Adviser before you make a complaint.

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So long as the articles of association of the limited company do not prevent someone who has signed a DAS acting as a director there is no legal bar to doing so. It is important you check this before signing a trust deed.

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Some public bodies have rules stopping anyone who has signed a DAS from holding office. It is important you check this before signing a trust deed.

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Yes. The credit reference agencies will record details of your DAS on your credit file for 6 years.

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Some employers do not allow people who have signed a DAS to work for them, most commonly financial institutions. Before you sign a DAS, you should check the terms of your contract carefully or speak to your employer.

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If you are struggling with debt, you should seek advice as soon as possible form a suitably qualified person such as an insolvency practitioner or your local Citizens Advice. Seeking advice and dealing with your debt at an early stage may help you avoid some of the more serious consequences of being in debt, such as legal action by your creditors and bankruptcy. Please call 0141 353 6203 for free, confidential and impartial advice.

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