Making the decision to enter any form of debt solution isn’t one that’s taken lightly.
With so much information available at our fingertips and a wealth of solutions offered, knowing what path to take, and trusting what advice to follow can be easier said than done.
As Scotland’s debt specialist we speak to people every day who are struggling with their finances and offer guidance to support these people into a solution suited to their needs.
One of the most popular solutions we advise is the Debt Arrangement Scheme, also known as the DAS.
Available to people living in Scotland who are struggling with debt, the scheme allows you to apply for a debt repayment programme (DPP) which helps you repay your debts at an affordable rate.
Overseen by the Scottish Government, a DAS protects people from legal action by the people and companies they owe money to and consolidates their debts into one monthly payment.
It offers the opportunity of a fresh start as all debts will be repaid in full at the end of the arrangement.
In our latest Monday Mythbusting offering, we share an insight into the most common misconceptions people have about the DAS.
1. All debts can be included in the DAS
The DAS is designed to offer much needed financial breathing space to those struggling, but not all debts can be included.
Most types of debt solution exclude secured debts such as mortgage payments along with child maintenance and student loans payments and the DAS is no exception.
However, unsecured debts not tied to an asset can be included in your DPP as part of the scheme.
Examples of unsecured debts include:
- Credit cards
- Utility bills
- Personal loans
- Overdrafts
- Store cards
- Council Tax arrears
If you’re struggling with mortgage or rent arrears, these may be considered in your DPP which is a point of difference between the DAS and other debt solutions.
It’s important to be aware that it’s not guaranteed that arrears of this nature will be accepted as part of the DPP and should speak with a qualified advisor for support.
You should also be aware that if rent or mortgage arrears are included in your DPP that you are not instantly free from the risk of eviction or repossession. Your provider must agree to the repayment plan outlined in the DPP and if you miss further payments you could still lose your home.
Every circumstance is different and so should be discussed with your advisor when making your application.
2. There is a charge to enter the DAS
It is free for someone to set up a DPP under DAS.
New regulation means that money advisors are no longer allowed to charge you a fee for helping you to apply for a DPP under DAS.
You will not be required to cover the cost of an administration fee for the running of the DPP, however, creditors included will need to pay this.
This means all the money you pay into the scheme goes towards writing off your debt.
3. I’m a homeowner, my property will be at risk
One of the advantages of the DAS is that homeowners don’t need to worry about selling their property as part of the scheme.
Assets such as your home or car are protected in the DAS as long as you continue to make payments, unlike some other solutions such as sequestration.
You may decide to sell your home to clear your debt and end the scheme sooner, however, this is entirely down to personal choice.
4. I won’t be able to repay a DAS early
Just because there isn’t a fixed end date when you enter the DAS, it doesn’t mean you’ll be repaying what you owe forevermore.
In fact, another advantage of the DAS is its flexibility.
If your circumstances change during the lifetime of your DPP, you can change the amount of contribution you are making.
That means if you find yourself in receipt of a cash windfall – an unexpected financial boost – or inheritance you can pay it towards what you owe.
As long as the lump sum clears your balance, your DAS administrator will end your Debt Payment Programme and you will be free to leave the arrangement early.
Equally, if life takes a twist you didn’t expect and you find yourself unable to pay your current contribution, you can apply for a payment break of up to six months. The period of time you are unable to make payments for is added onto the end of the DPP.
There’s also the opportunity to apply for a one-month crisis payment break should you find yourself in an emergency situation and unable to pay. You can have two crisis payment breaks in 12-months.
5. My employment will be affected
While it’s the case that some debt solutions can have an impact on your career, the DAS has no influence on employment.
For example, if you work in the financial industry your employment can be affected by becoming bankrupt while setting up a protected trust deed can prevent you from standing for public office or being a company director.
