Debt Arrangement Schemes allow people struggling with debt the space they need to repay what they owe while enjoying full legal protection from their creditors.
The scheme empowers you to settle your debts, avoid insolvency, and best of all, it’s completely free to set up and maintain.
Read on to find out what a Debt Arrangement Scheme is, how much it costs (hint – nothing), and the benefits of setting up a Debt Arrangement Scheme to repay your debts.
What is a Debt Arrangement Scheme?
The Debt Arrangement Scheme (DAS) is a formal repayment plan available in Scotland. It enables people struggling with debts to repay what they owe in a manageable way without having to worry about court action – including Sheriff Officers, wage arrestments, or their bank account being frozen.
Originally launched in 2004, the Debt Arrangement Scheme is unique to Scotland, although plans are now afoot to introduce a similar scheme across the rest of the UK.
Once a person’s debts are included in a Debt Arrangement Scheme, all interest and charges on debts are frozen, and creditors (the people or companies you owe money to) will be unable to take action like forcing bankruptcy.
A DAS allows you to apply for a Debt Payment Programme (DPP), which ensures you will make just one payment per month towards your debt, regardless of how many debts you hold.
Payment distribution will be taken care of for you, with your monthly payment being divided up and spread across all the individual creditors.
How long does a Debt Arrangement Scheme last?
The length of time your DAS takes will depend on how much money you are able to pay towards your Debt Payment Plan each month.
You will only be able to set up a DAS if you are seen to be able to repay what you owe in a ‘reasonable amount of time’. In theory, that could be up to 20 years, but in practice, a DAS usually takes less than 10 years.
Although every case is considered on its own merits, the average length of a DAS in Scotland is 6.8 years, after which you would be debt free and ready to move on with your life.
How much does a Debt Arrangement Scheme Cost?
Since November 2019, setting up a Debt Arrangement Scheme has been completely free. The new rules mean that the administration costs of setting up the agreement are covered by the creditors themselves.
As one of Scotland’s biggest providers of Debt Arrangement Schemes, Carrington Dean can set one up for you completely free of charge, offer our expertise to help you manage the arrangement, and ensure that every single penny you put into your DAS goes towards paying off your debts.
Is a Debt Arrangement Scheme a good option for me?
Because the approval of a Debt Arrangement Scheme is dependent on you paying off your debts in what is considered a ‘fair and reasonable’ amount of time, you should only apply for a DAS if you have some money left over at the end of the month to put towards your debts.
If you do have some level of disposable income, a DAS might be a good option for you if you:
- Live in Scotland
- Have one or more debts that you are struggling to repay on your own
- Are not already in a formal debt solution, like a protected Trust Deed or bankruptcy
If you are a homeowner who is struggling with debt, a DAS may be particularly interesting to you. Under formal debt solutions like Trust Deeds, you may have to release equity towards your agreement, or risk losing your home if you fall behind on payments.
Under a Debt Arrangement Scheme, homeowners with high levels of equity in their property are protected, meaning you can take time to repay what you owe without having to worry about keeping a roof over your head.
What are the benefits of a Debt Arrangement Scheme?
Free to set up
As previously mentioned, a Debt Arrangement Scheme is entirely free to set up. While there are costs associated with setting up a Debt Arrangement Scheme, as per Scottish Government legislation, those costs will be covered by your creditors.
Any additional costs involved with maintaining your Debt Arrangement Scheme will also be covered by your creditors, meaning every penny you pay towards the arrangement will go towards settling your debts.
Payment breaks
Another benefit of a Debt Arrangement Scheme is the ability to request payment breaks. If you were to take part in a DAS and encounter a financial emergency that impacts your ability to make your regular payment, you can ask your money adviser for a payment break of two months each year, without putting your arrangement at risk.
As per the rules of a DAS, where someone’s inability to pay lasts longer, it is possible to request a longer payment break of up to six months without losing the protection of the scheme.
Protection from creditors
A major benefit of a Debt Arrangement Scheme is protection from creditors. If you have multiple debts to different people, you may be being hassled by creditors contacting you and trying to get their money back.
Under a DAS, creditor harassment will stop, and your creditors will no longer be able to contact you directly. All interest and charges on your debts will be suspended during the DPP, leaving you free to make your monthly payments without fear of intimidation or enforcement action.
Who do I talk to about setting up a Debt Arrangement Scheme?
The Carrington Dean Group is one of Scotland’s leading providers of the Debt Arrangement Scheme, and its single largest Payment Distributor.
If you are struggling with debt and interested in exploring a Debt Arrangement Scheme, we can talk you through your options, set up a DAS on your behalf, and help maintain the arrangement, all completely free of charge.
