Debt-related problems are increasingly common and are one of the major sources of worry and stress in the modern world. Often, the longer a debt problem is left, the worse it becomes, especially when you are faced with threats of legal action being taken, or fears over losing your home or possessions.
However, if you are living in Scotland and have debts which you are willing to repay, but require more time to do so, the Debt Arrangement Scheme (DAS) could go a long way towards reducing the related stress and providing you with all of the necessary legal protection.
How It Works
Introduced by the Scottish government in 2004, the Debt Arrangement Scheme is a structured and legally-binding debt solution, intended to allow residents to repay debts at an affordable rate. This is achieved by establishing a Debt Payment Programme (DPP) between the debtor and their creditor(s).
When established, a Debt Payment Programme extends your debt repayment term, making the debt easier to repay. Payments are made to a Payments Distributor, who then divides the money among your creditors, based on the terms of the DPP. Once the covered debts have been repaid, the DAS comes to an end.
A DAS is not intended to reduce the level of debt and still requires a debtor to repay their debt in full. However, the length of the DPP and the amount that is paid each month is based on what a person is realistically able to afford.
Eligibility and Application
In order to be eligible for the Debt Arrangement Scheme, you must be “habitually resident” in Scotland, which means that your main residence must be in Scotland. People who work in Scotland but live elsewhere are excluded, as are people staying in the country temporarily.
A person may be eligible if they have one or more debts that they are struggling to repay, but have a reasonable amount of disposable income left after covering their essential living costs and basic needs.
If you are currently bankrupt, subject to a bankruptcy restrictions order, party to a protected trust deed or are repaying debt under a conjoined arrestment order, you will not be able to register for a DAS. However, after changes were made in 2011, people with unprotected trust deeds may be eligible.
To apply, you must seek advice and assistance from an approved and accredited debt advisor. This debt advisor then acts on your behalf and seeks approval to establish a DPP through the Debt Arrangement Scheme.
If you’ve got a debt problem, the Debt Arrangement Scheme offers a number of advantages over some of the other debt relief options available to Scottish residents.
Unlike with protected trust deeds, participation in the Debt Arrangement Scheme does not require a debtor to turn over equity in their home or vehicles, which makes it an ideal debt solution for people who are unable or unwilling to do so.
Although you will not pay a reduced amount on the debt you owe, assuming your application is successful, all interest, penalties and other charges are frozen. In addition, the DAS protects you fully from any legal action being taken by your creditors in order to recover their money.