All you need to know . . .
What is a Debt Arrangement Scheme?
If you live in Scotland and you’re finding it difficult to manage your debt, a Debt Arrangement Scheme is one of a number of debt solutions available to you. A Debt Arrangement Scheme (also referred to as a DAS) allows you to apply for a debt payment programme (DPP). Residents in England, Northern Ireland and Wales have a similar option available to them, known as a Debt Management Plan (DMP). While there are some similarities between the two options, a DAS and a DMP are both different in their own way.
A straightforward solution to managing your money and paying off multiple debts. It is an informal, flexible payment agreement between you and your creditors.
A Debt Arrangement Scheme may be suitable for someone who has money left over each month after paying his/her priority bills. It’s an option that helps you make affordable monthly payments to your non-priority debts.
A DAS allows you to repay your debts at an affordable rate, while still leaving you with enough money for your household bills and general living costs.
There are a number of factors you need to consider before applying. Fortunately, a Debt Arrangement Scheme can be a lot more flexible in comparison to other debt solutions such as a Trust Deed, Minimal Asset Process, or Sequestration. Applying for a Debt Arrangement Scheme can be an easy and simple process with the right advice and guidance. Depending on a person’s current financial situation, it may well be the most suitable option available to becoming debt free.
If you’re wondering if a Debt Arrangement Scheme is the right solution for you, speak to a debt management specialist at Refresh Debt Services for FREE advice on 0800 121 48 63 or request a call-back by completing the online form on this page.
What are the benefits of a Debt Arrangement Scheme?
A DAS allows you to make regular monthly payments, calculated in accordance with your current financial situation. You will still have enough money left over to afford a reasonable standard of living, it gives you more control over your finances compared to other debt solutions. You will not have to sell your assets including your car or property, as you may have to do this with a Trust Deed or Sequestration.
The amount you pay will be evenly distributed amongst your creditors each month, part of your monthly payment will cover the fees. All interest, fees and charges that are being applied to your eligible debts will be frozen. Your creditors will be unable to contact you or take additional legal action against you. The flexibility allows you to alter your monthly payments or apply for a 6-month payment break if your financial circumstances are due to change.
Once this debt payment programme has been completed, your debts will be written off. However, it is important to remember that you will still have to pay any outstanding debts that were not included in the initial application as well as debts that aren’t eligible for inclusion within the Debt Arrangement Scheme.
What are the drawbacks of a Debt Arrangement Scheme?
After being accepted for a debt payment programme, your details will be entered into the DAS register. This is an online register that members of the public can access. A DPP will appear on your credit file for 6 years. If you fail to keep up with your monthly payments, the DAS could fall through, and your creditors (people you owe money to) may start applying interest and/or take further legal action against you.
With a DAS, depending on your debt level, you may be making repayments over a longer duration of time. You will only be allowed to borrow a limited amount of money during your DPP under the DAS. However, in reality it may be difficult to borrow any money at all.
If you would like to discuss the advantages and disadvantages of a DAS with a Refresh debt advisor, call 0800 121 48 63 or use the online contact form on this page.
How to apply for a Debt Arrangement Scheme
If you have decided that a DAS is the right solution for your circumstances, we will put you in contact with a professional money advisor, should you need further help or advice, we’ll be right here to help.
The money advisor will help you set up and complete the Debt Arrangement Scheme. He/she will confirm that you understand how the DAS will work. At this stage, you will have to provide details about your income, assets, debts and creditors. These will be reviewed with you, and you’ll be able to agree on an affordable monthly payment. This process will ensure that all eligible debts are included within the DAS.
Apply now by calling 0800 121 48 63 or use the online contact form on the right to request a call-back
How much will I have to pay for a Debt Arrangement Scheme?
DPPs under DAS can be set up by a privately licensed debt management company. Each individual company may charge a different set-up fee. Once a DPP is approved, 10% of your monthly payments will cover the running costs of the programme. This 10% fee will cover the day-to-day management, correspondence and distribution of your payments to your creditors, in addition to carrying out regular financial reviews of your circumstances. This percentage is set by law.
The amount you will pay each month is usually calculated by identifying what your disposable income will be. This is how much money you have left over after covering your main expenditure. If there is a change in circumstances, e.g. a pay rise or loss of work, this will be reviewed, and you will have the opportunity to increase or decrease your monthly payments accordingly.
Who is eligible for a Debt Arrangement Scheme?
If you want to apply for a DAS, you must meet the right criteria in order to be considered eligible. The following must be met:
• You’re able to make contributions to your debts
• You must currently live in Scotland
• You owe money to one or more creditor(s)
• Your monthly disposable income must be at least £100
You will make monthly affordable payments to your DPP under DAS. This money is distributed between the creditors that you owe money to. 10% of your monthly payment will be deducted to cover the administration costs. The payments distributor will retain 8% and 2% will be sent to the Accountant in Bankruptcy (AiB) who acts as the administrator and oversees the DAS on behalf of the Scottish Government.
If you fall into these categories, a DAS may be the right debt solution for you. To find out more about setting up a DAS, call us on 0800 121 48 63 or complete the online form on this page.
What type of debt can be covered by a Debt Arrangement Scheme?
A Debt Arrangement Scheme is designed to help you manage debts in a more affordable way. If you’re struggling with any of the following ‘non-priority debts’ listed below, a DAS may help you become debt free.
• Personal loans
• Pay day loans
• Credit cards
• Store cards
• Overdraft, including fees and charges
There are also ‘priority debts’ which can be included within a DAS, these priority debts may include council tax arrears, benefit overpayments and utility debts such as gas, electricity or water.
There are debts which can’t be included within a DAS, such as court orders permitting to child maintenance, child support or student loans.
Is my home at risk if I take out a Debt Arrangement Scheme?
You will not have to sell your home. Other debt solutions may require you to sell your home in some scenarios.
Need more advice?
If after reading this, you believe that a Debt Arrangement Scheme may be the right solution for you, contact our expert debt advisors to discuss the advantages and disadvantages of using a DAS to become debt free. We’ll provide you with advice and guidance and be able to discuss a number of wider financial solutions available to you, ultimately helping you make the right decision for your future.
Call now on 0800 121 48 63 or use the contact form to the right to request a call-back.