What is the Debt Arrangement Scheme?

The Debt Arrangement Scheme is a way to manage unaffordable personal debts which has been made available to residents of Scotland by the Scottish Government.

It provides you with debt and general financial advice and presents you with additional time to repay your debts. Unlike an informal debt management plan, the Debt Arrangement Scheme provides you (and therefore your home also) with legal protection from your unsecured creditors. This prevents them from taking legal recovery action against you. The DAS Scheme also stops further interest from being added to your debts.

Why was the DAS Scheme introduced?

The Debt Arrangement Scheme in Scotland was originally created as a response to the problems caused by growing levels of personal indebtedness around Scotland. The Scottish Executive (as it was then) acted to provide an extra layer of assistance for those that needed to deal with debt problems. 

The Debtors (Scotland) Act of 1987 provided a couple of measures that could potentially halt creditor legal debt recovery action. These were ‘Time To Pay Directions’ and ‘Time To Pay Orders’. However, the scope of these options (which only applied to single debts) and the fact they had to be obtained from the courts, made them of limited value to individuals with multiple problem debts.

The Debt Arrangement Scheme (often abbreviated to DAS, or the DAS Scheme) was introduced to fill this perceived gap. It enables individuals (and couples) to obtain time to repay their debts without having to go to the courts.

Who might the Debt Arrangement Scheme appeal to?

The DAS Scheme may be of particular interest to those considering starting a protected trust deed but who realistically will not be able to release the equity that exists in their home. Unlike a Scottish trust deed, the Debt Arrangement Scheme does not require you to pay over the value of assets such as the equity in your home or a moderately valued vehicle.

The DAS Scheme may also appeal to anyone who has the ability to fully repay their debts if they could only stop interest and charges mounting up so quickly. Interest and charges will no longer be added under the Debt Arrangement Scheme provided that the individual (or couple) stick to the arrangements made.

Many people would prefer to fully repay their debts if it were possible. This is unlikely to be the case in a protected trust deed or bankruptcy (sequestration). The Debt Arrangement Scheme enables people to reschedule their debt repayments so their debts can be fully repaid at a rate that they can afford.

Who is eligible for a Debt Arrangement Scheme?

You may be eligible for DAS if you are resident in Scotland, have personal debts which you cannot afford to repay at the contractual rates, but have some spare income available that can be used to service your debts by paying into a Debt Arrangement Scheme.

You will not be eligible for the DAS Scheme if you are currently bankrupt, are in a protected trust deed from which you have not been discharged, are currently subject to a Bankruptcy Restriction Order or Undertaking, or in some circumstances where you are paying your debts under a conjoined arrestment order (seek advice if this is the case as there are exceptions in some circumstances).

To apply for the Debt Arrangement Scheme you must do so through a DAS Scheme Approved Money Adviser or Insolvency Practitioner. Your nearest local approved adviser can be found via the DAS Scotland website.

DAS Approved Money Advisers working for the CAB or Local Authorities are unlikely to charge a fee for their assistance providing Debt Arrangement Scheme advice. Other DAS Scheme approved money advisers work commercially (including Insolvency Practitioner firms) and may charge for their services. You should check this with your chosen money adviser prior to entering into any formal agreement and ensure that you understand the financial basis of your relationship with them.

Your DAS Scheme Money Adviser will assess your situation and ask you to provide proof of your financial circumstances. If you are suitable for the DAS Scheme the Money Adviser will apply on your behalf once you provide them with permission to do so (following the initial DAS advice process). The details of your Debt Arrangement Scheme proposal will be sent to all of the creditors you want to include. Each creditor will be given the opportunity to agree or disagree with the proposed arrangements.

Depending on your individual circumstances, your Money Advisor may suggest that you ‘intimate’ to the DAS Scheme Administrator that you intend to apply for a DAS Scheme. This will give you protection from legal action by your creditors a period of up to six weeks while everything is getting worked out and your Debt Arrangement Scheme is being set up. This could be important if some of your creditors are taking legal action against you or threatening to do so.

If all of your creditors agree, or have deemed to agree by not objecting to your proposal, your DAS Scheme be approved. If there are any objections the DAS Scheme Administrator will decide whether your Debt Arrangement Scheme proposal is to be approved. There are situations where “unreasonable” creditor objections may be overruled.

Benefits of the Debt Arrangement Scheme:

• You are protected from further legal action by your unsecured creditors.
• Current diligences (like a wage arrestment) must stop being enforced.
• Your creditors cannot bankrupt you.
• Interest costs (and other penalty fees) will be stopped from the date of approval and fully waived when your Debt Arrangement Scheme is completed.
• Pressure from creditors will be lifted and you’ll have support from the DAS adviser.
• Your home will be protected providing you keep up your DAS and mortgage/rent payments.
• The Debt Arrangement Scheme has the flexibility to be amended if your circumstances change (for the better or the worse).

Potential Drawbacks of the Debt Arrangement Scheme:

• Your debts will usually need to be fully repaid. In some circumstances this can result in a longer repayment schedule than other debt solutions (like a trust deed).
• As with most debt solutions, your credit rating will be negatively affected by the Debt Arrangement Scheme. Please see our “Credit Rating” page for further details.
• DAS should be considered to be a “formal” debt solution. In some instances it may be unsuitable for individuals seeking greater levels of flexibility than it provides.
• Interest may be re-added to the debts if you fail to complete your DAS Scheme.
• During your Debt Arrangement Scheme you cannot use further credit without receiving prior approval.

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