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What Happens After a Debt Arrangement Scheme (DAS)
There are a lot of things to consider when you are entering into a debt solution programme and, as you might expect, a common concern is the future. Many people living with problem debt report feeling anxiety about their future and seek help because they want to feel more in control. This makes understanding what happens after your debt solution just as important as what happens during it.
The Debt Arrangement Scheme (DAS) is a debt solution that allows you to lower your monthly payments with a Debt Payment Programme (DPP). This amount is based on your surplus income and you continue these payments until your entire debt is repaid. But what is it like to finish a DPP? What does it entail, and what can you do next?
Completing Your DPP
Your DPP has a number of conditions that need to be fulfilled before it officially ends. Normally, the requirements involve you making your agreed payment every month until your entire debt is repaid. However, you may have arranged necessary payment breaks, and your creditors may have agreed to end your repayments early if they would have gone on for an ‘unreasonable’ length of time, such as 10 or 12 years.
With all the terms fulfilled, the debts that were included in your DPP are now either fully repaid or written off. Although you might not necessarily be ‘debt free’, as you may still have a mortgage to repay and other debts that couldn’t be included in the DAS, you are now in a more financially secure position to plan for the future.
How do Lenders and Creditors know?
Three key events happen when you have officially completed your DPP.
- Your creditors are told that your debts have been repaid
This means that your relationship with those creditors should end, your account with them should be closed and you can look forward to never being contacted by them again. If they do contact you, firmly tell them that your debt with them has been repaid and provide them with the paperwork if necessary. If they continue to contact you, you can contact the Citizens Advice Bureau consumer service and provide evidence.
- Your name and details are removed from the DAS register
Being removed from the DAS register might just be the most important step in ending your DPP. The register is what credit report agencies use to add the DAS to your credit file and to determine your credit score. Lenders, in turn, use this to judge how creditworthy you are. A low credit score can result in credit being refused or very high interest rates. Now that your DAS is removed from your credit report, you can start to rebuild your credit score. This is particularly important if you are considering taking out further credit or a mortgage.
- If you are paying your DPP payments directly from your wages, your employer is told to cease the wage arrestment.
Wage arrestment is not mandatory for your DPP, but in some cases it is used to help people to budget more carefully if they may otherwise struggle to prioritise the DPP payment. Regardless of whether you had your payments taken directly from your wages or not, you now have that extra amount every month to spend how you please.
It is a good idea to consider working on your savings so that you can create a cushion for future financial emergencies. Generally, the ideal is to have 6 months expenditure saved for a rainy day. Once you have your emergency fund, you can save for all sorts of things, from holidays to deposits and pensions.
The Next Steps
Now that your creditors are gone, your credit score can start to grow, and you have more financial freedom to save, here is some advice about your next few steps:
- Keep budgeting – don’t let your new skill go to waste just because you might not have to do it
- Rebuild your credit – even if you don’t plan to take out credit in the future, you never know when it might be useful
- Learn about ‘good debt’ and ‘bad debt’ – don’t take out anything you haven’t got a plan to repay
- Save an accessible emergency fund
- Learn about other savings options and set yourself goals to achieve
- Enjoy life and save up for some real treats – you’ve earned it!