A Debt Arrangement Scheme (DAS) is a debt solution available in Scotland which proposes a Debt Payment Programme (DPP) to your creditors. A DPP allows for a legal reduction of your monthly payments based on your genuine income and expenditure so that they become more affordable. Your interest and fees are usually frozen and you continue to pay monthly payments until your entire debt is paid.
Paying For Your DAS
Regardless of who you go to for a DAS, the individuals and organisations involved in managing your arrangement must be paid for their work. There are two different fees to know about. The first fee covers the distribution of your payments to your creditors and the second fee is paid to the Accountant in Bankruptcy for overseeing your case.
These fees are charged at 22% of your total debt repayments. To break that down, the payment distribution fee is set at 20% and the payment to the AiB is set at 2%.
Who Pays?
The good news is that most DAS suppliers, both charities and private companies, take their fees from your payments, rather than expecting you to afford additional payment. This does mean that your creditors are in essence paying for your DAS by agreeing to deduct the fees from the total amount they are owed.
While not having to pay any fees from your own pocket is an advantage of the DAS, it is important to note that your DPP must be approved by your creditors. Some creditors may not be happy to receive less than the total amount of their debts. This might not be a problem as creditors who object can be overruled by the DAS administrator, providing that they view the proposed DPP as ‘fair and reasonable’. Regardless, it is worth considering a very experienced DAS provider as they usually know which creditors are happy with a DAS, and which usually object to them.
Some advisers, however, do charge you the fee, rather than your creditors, or may have other additional fees. It is important that you ask about fees before you enter into any agreement. Make sure you know how their services are being paid for and what effect this could have on your DAS.
Rejected DPPs
Different organisations might deal with this in different ways as you will no longer be making any payments. While payment distributors always charge for their services, it is quite common for money advisers not to charge for their advice and application. As many money advisers do both jobs, being rejected can mean you don’t have a fee to pay.
Generally, it is recommended to go with an experienced company or charity who only charge for a successful DPP application and who take these fees from your affordable monthly payments. This means that they will have experience working with a variety of creditors and are incentivised to give you the best advice. If they believe that you will be denied, they will tell you honestly as your rejection will also result in them not being paid.
Alternative Debt Solutions
The good news is that the fees associated with a Trust Deed, another popular formal Scottish debt solution, are similarly calculated and organised. Most Trustees take their payment from the monthly payments that are going to your creditors. All Trustees, whether from charities or private companies, need to be paid, but most should take this from your payments. As with a DAS, it is a good idea to ask to make sure know what you are agreeing to.
Unfortunately, sequestration, or bankruptcy, does require a fee and you should take this into consideration when you are deciding which debt solution is best for you. Depending on its form, sequestration can cost you £150. Debtors with smaller debts could be eligible for a form of sequestration called Minimum Assets Process (MAP).
