Debt Arrangement Scheme

What Is The Debt Arrangement Scheme?

The Debt Arrangement Scheme is a formal debt management arrangement that is available only to residents of Scotland. If your residence is in Scotland and you are considering how to deal with your debts this option should be seriously considered, especially if you are already considering starting a debt management plan arrangement.

Unlike a debt management plan, the Debt Arrangement Scheme provides a number of protections granted when the Scottish Executive established it. It should therefore be viewed as a formal debt management option in contrast to the more informal nature of a traditional debt management plan.

DAS Scheme Benefits

The DAS scheme incorporates a number of features that provide benefits to debtors over and above those provided by an informal DMP.

When a DMP begins there is typically an initial period during which agreements are not in place and creditor collection activity increases. This typically settles down quickly enough but can cause some disruption in the early stages. By contrast, the administrator of the Debt Arrangement Scheme can be requested to provide an initial period during which creditors will be unable to start formal legal debt recovery measures. The DAS scheme therefore may afford a period of “breathing space” during which the appointed advisers will work with creditors to get the plan up and running.

A debt management plan usually involves a request from the DMP provider that creditors cease levying additional interest and charges on top of the capital owed. Thankfully most creditors are open to freezing or reducing interest and other charges to assist debtors that wish to repay what they owe. However, a debt management plan does not guarantee that interest will be stopped. In the Debt Arrangement Scheme, once it is up and running, no further interest or charges can be added provided that the debtor adheres to the agreement that has been put in place.

The DAS scheme also provides legal protection from creditors in almost all circumstances. This is not the case with an informal debt management plan where creditors can choose to start legal action at any point if they choose to do so. The Debt Arrangement Scheme can therefore provide protection against troublesome and potentially embarrassing events such as wage arrestment.

The benefits of proceeding with the DAS scheme are therefore clear. It may lack some of the flexibility of a DMP and could well take a little more time to get it set up. However, the Debt Arrangement Scheme will typically result eventually in a more reassuring and protective environment from which the debtor can work towards becoming debt free.

Can you switch from an existing debt management plan?

The fact that you are already in a debt management plan would not prevent you from switching to the Debt Arrangement Scheme.

Even if your debt management plan appears to be working well the reassurance of the protections afforded by the DAS scheme is likely to represent sufficient reason to make the switch.

We would however suggest that you take professional advice in advance of cancelling a debt management plan so that the timings of a switch to the Debt Arrangement Scheme can be properly considered in advance.

Getting Started with the Debt Arrangement Scheme

If you want to get started with the DAS scheme the first step is to recruit the help of an appropriately qualified individual. This is a specialist area and only a DAS Approved Money Adviser can actually get the process fully underway.

DAS Approved Money Advisers are employed in two distinct sectors. There is free help available from DAS Approved Money Advisers working for the CAB or for Local Authorities. They will not typically charge you for their services.

There are also DAS Approved Money Advisers that can help you set up the Debt Arrangement Scheme to deal with your debts on a commercial basis. They may be employed by debt advisory companies or protected trust deed providers. We suggest confirming the basis of their charging structure before going ahead.

The Money Scotland website contains a tool by which you can locate advisers that are based close to you. This is likely to be a requirement for free-sector advisers while commercially funded DAS Approved Money Advisers may cover a wider geographical area.

If you have further questions about the Debt Arrangement Scheme the professionally qualified debt advisers at Debt Divas can help you. Please contact us on 0800 0437207 or submit one of the contact forms on this website.

 

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