Debt Arrangement Scheme

The debt arrangement scheme (DAS) is a debt solution similar to a debt management plan, but with added benefits for people living in Scotland.

If you can’t meet your monthly financial obligations to your debt then a debt arrangement scheme (DAS) could help you get your interest and charges frozen so that you can repay your debt quickly and in full.

You make one monthly payment to one organisation until all of the debt has been repaid.

You could wonder, what’s the difference between a debt arrangement scheme (DAS) and the other Scottish debt solutions, such as a trust deed? Well they all have things in common, such as;

- All three solutions are recorded and regulated by the Accountant in Bankruptcy who registers each debt solution.

- If the proposed solutions proceed then your interest and charges will be frozen.

- You will only be asked to make an affordable monthly repayment.

- A default will be added to your credit file for all three solutions which will last for 6 years from the date it’s applied.

- They are all formal debt solutions which are legally binding for both you and your creditors.

The major differences between the debt arrangement scheme (DAS) and the other Scottish debt solutions are:

- You enter a debt arrangement scheme (DAS) with the intention of repaying all of your debt, whereas in a trust deed and Scottish Bankruptcy you don’t typically plan to repay all of the unsecured debt you borrowed.

- Your house is protected in a trust deed and debt arrangement scheme (DAS) but you will have to release equity in a trust deed, which you won’t have to do in a debt arrangement scheme (DAS).

- If you have more equity than unsecured debt and can afford to pay your debt back over a sensible period of time then the debt arrangement scheme (DAS) is a better solution than the trust deed orScottish bankruptcy.

- You can enter a joint debt arrangement scheme with a wife or partner, but you can’t enter a joint trust deed or bankruptcy.

A prime example of why somebody would enter a debt arrangement scheme would be:

Jason and his wife Jennifer live in a mortgaged property. The mortgage is £100,000 and the property is valued at £200,000. There is £100,000 equity tied up in the house.

Jason and Jennifer has unsecured debt of £20,000 and are struggling with their contractual obligations of £450 each month, but they could afford £300. So what should they do?

Well, one option is a debt arrangement scheme.

The debt arrangement scheme (DAS) would last for 5 1/2 years and Jason and Jennifer would make their monthly payment to one company who would spread the payment around the creditors on a pro-rata basis. If the proposal was put to the creditors and a creditor objected the couple could apply to the AiB to conduct a fair and reasonable test.

The Fair and Reasonable test determines if you are repaying your debt in an affordable and timely manner. If the AiB decide that you are (usually in under 10 years) then the objecting creditor will be informed that the DAS is proceeding.

However, what if the Jason and Jennifer lived in rented accomodation and didn’t have any assets? Well, all three solutions would be applicable.

Professional debt arrangement scheme advice

If you think a debt arrangement scheme could be the correct debt solution for you then contact a debt advice charity for debt help. The local Citizens Advice Bureau can provide face to face advice whilst Debt Support Trust can offer telephone and internet based debt help.

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John The Bankruptcy Guy

As an ex-bankrupt, John has experienced the highs and lows of credit. It's with this knowledge that he writes Debt Advice Resource - to help others avoid, or navigate out of, the pitfalls of debt.

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