26/07/2019

Debt Arrangement Scheme repays more Debt than any other Solution

26/07/2019

Debt Arrangement Scheme repays more Debt than any other Solution

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Scotland’s formal debt repayment plan, The Debt Arrangement Scheme, is now repaying more money to creditors than any other formal debt solution in Scotland.

New statistics published by Scotland’s Insolvency Service, the Accountant in Bankruptcy, show that in the last three months of this year, the Debt Arrangement Scheme (DAS) repaid £9.3 million to banks, credit card companies and other lenders.

This is similar to the amounts that were repaid last year, when the DAS repaid £37.6 million to creditors, whilst Bankruptcies and Protected Trust Deeds only repaid £14.2 million and £22.3 million respectively.

The quarterly statistics, that are published, by the Accountant in Bankruptcy’s office, also show that in the first three months since April 2019, 738 Debt Payment Programmes (DPPs) under the Debt Arrangement Scheme were set up, compared with only 646 over the same period last year.

Sequestration numbers also fell by 5.1% in the last three months, with only 1,184 being made bankrupt; whilst the numbers entering Protected Trust Deeds increased by almost a fifth (18.6%) to 2,336.

So, although the number of people entering the Debt Arrangement Scheme was less than any other solution, the DAS repaid more to creditors than the other two solutions combined.

What is the Debt Arrangement Scheme?

The Scottish Debt Arrangement Scheme is unique in the UK, in that it is the only formal debt repayment plan that is provided for by law and allows consumers, who are struggling to repay their debts, to do so in an organised way.

It freezes all interest, charges and fees and stops any penalties being applied to debts, whilst people repay what they can afford towards them.

It also stops bank arrestments by Sheriff Officers and can life wage arrestments, even after they have been applied.

It can also stops creditors applying for bankruptcies once their customer is in the Debt Arrangement Scheme, so their home is safe, providing they continue to pay their mortgage.

Can you keep your car in the DAS?

As the Debt Arrangement Scheme is not a form of personal insolvency, it is possible to keep your car whilst you are in it, even if the car is subject to a finance agreement, like hire-purchase or a Personal Contract Purchase plan (PCP). Providing you can afford the repayments, your adviser will normally allow your car payment as part of your essential living expenditure.  This will ensure they are paid in full each month, and not treated like a debt, meaning the agreement should continue as normal.

What if I have mortgage arrears?

If you have mortgage arrears, you can also arrange to keep these out the Debt Arrangement Scheme, meaning you can enter into a separate agreement with your lender and make those payments separate to your DAS. Alternatively, if your lender agrees, you can include the arrears into the Debt Arrangement Scheme and pay these through your Debt Payment Programme (DPP), whilst continuing to make your normal monthly payment to your mortgage provider.

Why do Lenders like the Debt Arrangement Scheme?

Contrary to what you would expect, most lenders actually like the Debt Arrangement Scheme and the Debt Payment Programmes that consumers use to repay their debts.

Although they would prefer people were able to repay their debts, they accept this is not always possible and sometimes people need some breathing space and help to get on top of things again.

However, what they like about the Debt Arrangement Scheme is they get most of their money back, usually over 90%. This, for them, is preferably to personal insolvency solutions like Bankruptcies or Protected Trust Deeds, where often the sums returned are usually a lot less.

Is the DAS always the best Solution?

The Debt Arrangement Scheme, although suitable for some, is not always the best solution for everyone.

It simply is not always possible for people to repay their debts within a reasonable period and for many it will take more than five or six years.

That is where solutions like Protected Trust Deeds and Sequestration come in, as they allow people who cannot repay their debts within a reasonable time, to get relief from their debts with some of it being written off at the end of the solution.

Can we help you?

We are debt experts and Scotland’s leading provider of formal debt solutions.

Unlike many services that only offer some solutions, we can offer the Debt Arrangement Scheme and Protected Trust Deeds.

This is important as it means when you contact us we can help you consider all the options and help you select the one most suitable for your needs.

For a free and confidential discussion with a Carrington Dean advisor, call 0808 2085 195.

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