Debt Arrangement Scheme

Only available in Scotland, a Debt Arrangement Scheme allows you to repay your debts at an affordable monthly rate with no contact from creditors.

A Debt Arrangement Scheme is managed by a DAS administrator and how long your arrangement lasts depends on the amount of debt that you owe. It is ideally suited for individual who wouldn’t have trouble repaying debt in a reasonable sum every month. They are commonly a long-term debt solution but can also be paid off in large/lump sums if needed.

Is a Debt Arrangement Scheme a good idea?

When the Scottish Government set up the scheme, the main aim is to allow someone to pay debts back without fear that a creditor would simply decide to take someone to court. The scheme is a good idea, as it provides something of a safety net for people who actively want to pay back debts without the threat of legal action from a creditor.

How does a Debt Arrangement Scheme work?

The crux of the scheme involves the creation of a Debt Payment Programme (DPP). When you decide you need help, you would get in touch with an advisor like the team here at Hillcrest Finance. The advisor will look at your information and create a DPP application.

This application states that you can pay a monthly sum which is deemed affordable and is sent to your creditor(s). They either accept it and everything is approved, or they object to it. If they object, your advisor would present the plan to a DAS administrator who must decide if the application is fair.

If the objection is overruled, the scheme starts and you pay the advisor, who manages everything on your behalf.

Can I get a Debt Arrangement Scheme in the rest of the UK?

Debt Arrangement Schemes are only available in Scotland. Similar debt management schemes which one could opt for in the rest of the UK would be IVAs, Debt Management Plans & Bankruptcy.

Advantages of a Debt Arrangement Scheme

This scheme can be favourable as:

  • You will only make a single monthly payment, based on what you can afford.
  • Entering a DAS will protect you from companies issuing demands or threatening court action against you.
  • The DAS will guarantee to freeze all interest and charges on the debts included once approved.
  • You can apply for a payment holiday of up to six months should you find it difficult to pay.
  • A DAS is a flexible arrangement which means if your circumstances change you could be able to vary your payment amount to make it more affordable – or to pay it off quicker if your situation allows.
  • Creditors who don’t accept the proposals can be forced to comply with the arrangement if it’s deemed to be ‘fair and reasonable’.

Disadvantages of a Debt Arrangement Scheme

A DAS may not work for you in some areas:

  • Your credit rating may be affected.
  • If you don’t comply with the conditions, then your DAS could be revoked. This means companies can then pursue legal action against you.
  • No debt is written off, you only get relief from interest and charges.
  • It could take longer to pay off your debts than with other solutions.

Does a Debt Arrangement Schemes affect a mortgage?

No. As the scheme is designed for the individual to pay back at an affordable rate, the mortgage isn’t included, although it is factored into the payment alongside other essentials like bills and insurance.

How long do Debt Arrangement Schemes last?

There is no real limit on the scheme, although it is frowned upon if your application were to state you would be paying for a period beyond 10 years. Remember, the whole point of Debt Arrangement Schemes is that they’re paid back in a reasonable timeframe.

Can you change how much you pay into a Debt Arrangement Scheme?

Yes, it is possible to change the amount, but only infrequently as you are tied to certain rules. The only time you would expect any real fluctuation would be if income lowers and forces a break in repayments (for which, the government allows six months).

What alternatives are there to the Debt Arrangement Scheme?

Other debt solutions in Scotland would include Trust Deeds, Consolidation Loans, and Sequestration in more serious circumstances.

Get advice on Debt Arrangement Schemes from experts

If you’re living in Scotland and would like to know if a Debt Arrangement Scheme is the right option for you, please get in touch with Hillcrest Finance today.

You can call every weekday from 8 am on 0141 478 0862, or get in touch via WhatsApp.

Get in touch with us about a Debt Arrangement Scheme today