Will the Debt Arrangement Scheme Expand Around the UK?

The Debt Arrangement Scheme (DAS) is currently only available to residents of Scotland. It was introduced several years ago by the Scottish Government to improve access to effective debt solutions. Despite a slow start where take-up was limited by difficulties in promoting the scheme to the Scottish public, the message about the benefits of the Debt Arrangement Scheme now seems to be becoming an increasingly popular debt management solution. The number of people entering into the Debt Arrangement Scheme in Scotland has grown dramatically over the past twelve months.

The Debt Arrangement Scheme sets out to override some of the limitations of the widely-promoted and used debt management plan. Around the UK it’s understood that hundreds of thousands of people have entered into a debt management plan (DMP) to deal with their debts on an informal basis. The weakness of a DMP is however that very informality. Creditors do not have to accept a debt management plan and are free to continue or start new legal actions against the debtor (often directed at their home). There is also no requirement to permanently freeze the addition of interest costs.

Meanwhile, the Debt Arrangement Scheme, where successfully put in place, prevents legal action by these unsecured creditors and ensures no further interest accrues.

In contrast to the Debt Arrangement Scheme, the debt management plan and its providers have been under a less than flattering spotlight for a couple of years. Both political, and media, attention has focussed on the failings of certain debt management plan providers, although the fundamental problems with the plan itself have also drawn attention. This negative press may mean that the introduction of a scheme that works as effectively as the Scottish Debt Arrangement Scheme may be working its way up the political agenda in England, Wales and Northern Ireland.

Debt solutions fall into two broad types. Some solutions include a degree of debt write-off. These include:

• Bankruptcy
• Protected trust deeds
• An IVA.

Other solutions exist to reschedule the repayment of debt in an affordable manner. Included in this category could be:

• Refinancing (for example consolidating debt on your mortgage),
• A DMP
• The Debt Arrangement Scheme

Those solutions that include write-off are highly regulated and controlled already. The same is true of mortgages (FSA), and the Debt Arrangement Scheme in Scotland. The exception is debt management plans, where all that is required is a consumer credit licence issued by the OFT.

Creating a version of the Debt Arrangement Scheme elsewhere in the UK could serve a number of purposes.

A number of public bodies are currently looking into the provision of debt advice around the UK currently with keen ministerial interest in the findings and future options. Where, when and how a new type of Debt Arrangement Scheme will be introduced outside of Scotland remains to be seen, but there appear to be merits to the idea which will not have escaped debt professionals and members of parliament.

To learn more about the Debt Arrangement Scheme and its many benefits, or to learn more about other debt management solutions, including trust deeds and more, browse our informative website. Our site if full of information and advice from highly qualified debt management professionals. You’ll also find a great forum where you can discuss the Debt Arrangement Scheme and any queries you might have regarding dealing with debt. Talk to experts on our advice line now: 0800 043 7201.

Trust Deed Latest News

Trust Deed Firms