THE DEBT ARRANGEMENT SCHEME (DAS) DEBTOR INFORMATION BOOKLET. on a positive note. Debt Arrangement Scheme

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1 THE DEBT ARRANGEMENT SCHEME (DAS) DEBTOR INFORMATION BOOKLET on a positive note Debt Arrangement Scheme

2 This booklet provides general information on the Debt Arrangement Scheme (DAS) and is not intended as a full statement of the law. DAS is a statutory debt management scheme introduced by the Scottish Government to help people repay their debt(s) over an agreed period of time without the threat of court action from creditors. For a variety of reasons some people find that they are struggling to repay their debt(s) and need support to cope with their situation. Getting advice as soon as possible can help you to deal with your debt(s). You can find contact details of some organisations who offer free advice at the back of this booklet. Further information on some alternatives to DAS is also included later in this booklet. The main legislation relevant to DAS is the Debt Arrangement and Attachment (Scotland) Act More information on DAS and all related legislation and publications are available on the DAS website at:

3 CONTENTS 1. DEBT ARRANGEMENT SCHEME 1.1 What is DAS? 1.2 How can DAS help me? 1.3 Does DAS cost anything? 1.4 Am I eligible? 1.5 Who is involved? 1.6 Is DAS only available for individuals? 1.7 Will it affect my credit rating? APPLYING FOR DAS 2.1 How do I apply for a DPP? 2.2 What information is in a DPP? 2.3 What happens if my DPP is approved? 2.4 What happens if my DPP is rejected? 2.5 What is the Fair and Reasonable test? 2.6 Am I protected during the application period? 2.7 What happens when I complete my DPP? CHANGES TO YOUR DPP 3.1 What if I do not comply with the conditions of my DPP? 3.2 What can I do if my DPP is revoked? 3.3 What happens if my circumstances change? 3.4 How many times can I apply for a payment holiday? 3.5 How do I apply for a variation? DAS WEB PORTAL 5. ALTERNATIVES TO DAS 6. CONTACT INFORMATION AND ADVICE SOURCES

4 1. DEBT ARRANGEMENT SCHEME DAS is the only official government debt management scheme in Scotland, created to help you repay your debt.

5 1.1 What is DAS? The Debt Arrangement Scheme (DAS) is a statutory debt management scheme introduced by the Scottish Government to help you repay your debt(s). Under DAS, you can apply for a Debt Payment Programme (DPP) that allows you to pay off your debt(s) over an extended period of time. Your DPP will take into account what you can reasonably pay back at regular intervals based on your disposable income. There is no limit on the level of debt or the repayment period in a DPP. A programme can last for any reasonable length of time subject to the value of the debt. When the DPP is approved all interest, fees, penalties or other charges that would have applied to your debt(s) are frozen and are waived upon completion of your DPP. Once approved, a DPP can prevent enforcement of debt(s) by the court. Creditors included in your DPP are prevented from petitioning for your bankruptcy as long as you maintain the agreed payments in your DPP under DAS. 1.2 How can DAS help me? DAS is a Scottish Government scheme that: allows you to make one regular payment towards clearing your debt meaning you don t have to deal with your creditor individually. freezes interest, fees and charges on your debt, from the date your DAS debt payment programme is approved and this is waived on completion of the DPP. provides protection from creditors taking enforcement action to recover money owed to them, and is often free for people paying debt under an approved debt payment programme (DPP). However, some money advisers may charge a fee for their service. 3

6 Your Money Adviser will help you decide if DAS is right for you. 1.3 Does DAS cost anything? You can get free confidential and impartial advice in your local area or pay for advice through a number of financial services organisations. People who can give free, face-to-face advice include advisers in Citizens Advice Bureau and Local Authority money advisers. You can find contact information at the back of this booklet or find a money adviser near you on the DAS website at: Some organisations may also give information and advice over the telephone or online. Please note that some organisations will charge you for the provision of money advice. You should check the details and costs with your chosen money adviser prior to entering into any agreement. 1.4 Am I eligible? You may be eligible to participate in DAS if you have one or more debts and meet the following criteria: you live in Scotland; you have sought the advice and assistance of a DAS approved money adviser; you wish to repay your debt(s) without the threat of your creditor(s) taking legal action against you; you have a reasonable level of surplus income after meeting your basic needs, for example (mortgage, rent, utilities, food, council tax). 4

7 You are ineligible to participate in DAS if you: have granted a Protected Trust Deed from which you have not been discharged; or are bankrupt or subject to a Bankruptcy Restrictions Order or a Bankruptcy Restriction Undertaking; or are subject to a time to pay direction under section 1 (time to pay directions) or section 5 (time to pay orders) of the Debtors (Scotland) Act 1987, in respect of that debt (only applicable where a debtor has a single debt to be included in DAS); or are subject to a time order under section 129 (time orders) of the Consumer Credit Act 1974, in respect of that debt (only applicable where a debtor has a single debt to be included in DAS); or are paying a debt(s) under a conjoined arrestment order. If you have a conjoined arrestment order and a creditor (it does not matter whether this creditor is involved in the conjoined arrestment order or not) has tried lawfully to enforce another debt(s) that you owe, then you may be eligible for a DPP. If you are not certain whether you are eligble to apply contact your money adviser for advice. 1.5 Who is involved? Debtor: An individual who has personal debt(s) and has agreed to a Debt Payment Programme (DPP). DAS Approved Money Adviser (a money adviser): An individual who meets the criteria to offer a DPP under DAS as a debt management option. Creditor: An individual or organisation who you owe money to. 5

8 DAS Administrator: The Accountant in Bankruptcy (a Scottish Government official) who oversees the administration of every DPP. Payments Distributor: an organisation responsible for the collection of DPP payment instalments from debtors and the distribution of these funds to creditors. 1.6 Is DAS only available for individuals? Couples who have at least one debt for which they are jointly liable may apply for a joint DPP if their relationship falls within the following criteria: husband and wife or living together as husband and wife; civil partners; or living together in a relationship with the characteristics of a husband and wife relationship, except that they are of the same sex. For a joint DPP proposal to proceed, both applicants must consent to the DPP proposal. 1.7 Will it affect my credit rating? If you participate in DAS then your details will be recorded on the DAS register. This is a register which can be accessed free of charge. Creditors and credit reference agencies check this register on a regular basis and may update your credit file to reflect this information. While you have a DPP under DAS, you will not normally be able to access further credit. 6

9 2. APPLYING FOR DAS DAS freezes all interest, fees, penalties or other charges that would have applied to your debts and waives them upon completion of your DPP

10 2.1 How do I apply for a DPP? To apply for a DPP under DAS you must seek the advice and assistance of a money adviser. Your money adviser will discuss your income and expenditure with you and calculate how much surplus income you have. They will also ask you to provide proof of your financial circumstances. If you and your money adviser agree that you are suitable for DAS, your money adviser will apply for a DPP on your behalf. The details of your DAS DPP proposal are sent to all of the creditors that you include in your DPP. 2.2 What information is in a DPP? Your DPP proposal will clearly state: the total amount that you owe; the agreed amount for each repayment instalment; the frequency of the proposed payments; and the proposed length of your DPP. Each creditor in your DPP will be given the opportunity to accept or reject the terms of your DPP proposal. The creditors included in your DPP are given a period of 21 days to respond to the DPP proposal. If creditors all accept or are deemed to have accepted (because they do not respond within the 21 days) the DPP under DAS is agreed automatically. Creditors in your DPP will then be bound by this DPP provided that you continue to adhere to the agreement. If the creditors included in your DPP do not consent to your DPP proposal, the DAS Administrator can still approve the DPP if it is found to be fair and reasonable to do so. 8

11 2.3 What happens if my DPP is approved? If your DPP proposal is approved, your debt(s) will be paid through a single regular payment. An approved payment distributor is responsible for making payments to your creditors. Your money adviser or the DAS Administrator will make the necessary arrangements with an approved payment distributor to allow your DPP to start. You can make your payments to the payments distributor by: payment mandate to your employer; direct debit or standing order; smart card, swipe card, smart key or other type of payment card or key; or another method of payment which has been agreed with the DAS Administrator. Your initial payment must be made within one month of the date your DPP was approved. 2.4 What happens if my DPP is rejected? If your DPP proposal is rejected, you should contact your money adviser to discuss your options. This may include submitting a revised proposal. You also have the right to appeal to a sheriff on a point of law against the DAS Administrator s decision to reject your application. 2.5 What is the Fair and Reasonable test? The Fair and Reasonable test is the criteria that the DAS Administrator will use when deciding on whether to approve or reject a DPP application. 9

12 In considering whether to approve or reject a DPP the DAS Administrator must take into account: the total amount of debt; the total period of time for the proposed payment plan; the method and frequency of the regular payments; the extent to which the creditors have consented; any other views from the creditor; comments made by the money adviser; any previous DPP application; and any other factor which the DAS Administrator considers appropriate 2.6 Am I protected during the application period? Depending on your individual circumstances, your money adviser may ask you to advise the DAS Administrator that you intend to apply for a DPP and this is referred to as an intimation. An intimation will protect you from action to enforce payment of any debt(s) for an interim period of up to 6 weeks immediately prior to the submission of your DPP application. You are only allowed to submit one intimation in any 12 month period. Once your DPP application is submitted, you will remain protected. This protection will be removed should you decide to withdraw your DPP application, or if your application is rejected by the DAS Administrator. 2.7 What happens when I complete my DPP? Once your DPP has been completed your details are removed from the DAS Register and your creditors will be informed that your DPP debt(s) have been repaid. If you are repaying your DPP direct from your wages, the DAS Administrator or your money adviser will write to your employer to cease the deduction from your wages. 10

13 3. CHANGES TO YOUR DPP If your circumstances change you may apply for a variation to your DPP.

14 3.1 What if I do not comply with the conditions of my DPP? If you miss payments or make part payments resulting in you owing the equivalent of two of your agreed DPP instalments, your DPP may be revoked. If you fail to comply with any of the conditions of your DPP, then the DPP may be revoked and your creditor(s) will be able to pursue enforcement action against you. 3.2 What can I do if my DPP is revoked? If your DPP is revoked, you will be liable for all interest, fees and charges that would have been payable had you not entered into your DPP. You should contact your money adviser to discuss your options. You have the right to appeal to a sheriff on a point of law against the DAS Administrator s decision to revoke your DPP. 3.3 What happens if my circumstances change? If your circumstances change and you can no longer afford the agreed payments, or wish to increase the level of payment, you may apply for a variation to your DPP. You may wish to discuss this with your money adviser before you decide to proceed. DPPs sometimes become unmanageable due to a short term income shock where an individual, or someone in their household, experiences a reduction in their disposable income. In these circumstances, a debtor can apply for a six month payment holiday where their disposable income has reduced by 50% or more in the following circumstances: a period of unemployment or change in employment; a period of leave from employment for maternity, paternity, adoption or to care for a dependant; 12

15 a period of illness of the debtor; divorce, dissolution of a civil partnership or separation from a person to whom the debtor is married or the civil partner; death of a person with whom the debtor shared care (financial responsibilities or otherwise); the payment holiday will interrupt the term of the DPP, therefore the term of the DPP will be extended by the same period. 3.4 How many times can I apply for a payment holiday? There is no limit to the number of times you can apply for a payment holiday provided you meet the necessary criteria. Before approving the variation, the DAS Administrator will take previous payment holidays into account as part of the decision-making process where appropriate. 3.5 How do I apply for a variation? You or your money adviser may apply to the DAS Administrator for a variation to the DPP. An application for a variation of a DPP can be made: on agreement between the debtor and each creditor in the DPP; on agreement between the debtor and a creditor that a debtor s liability to repay a sum is to be discharged; on a significant change in the debtor s circumstances; where the amount due under the DPP was wrongly assessed; where additional debt(s) come to light that were not included in the original DPP; and where the debtor requires credit for emergency repairs, funeral expenses or other exceptional items. On application for a variation, your new circumstances will be considered by the DAS Administrator and, if appropriate, a revised payment programme may be agreed. 13

16 4. DAS WEB PORTAL The web portal gives you online access to your case so you can see what s happening with your payments.

17 DAS has a dedicated web portal that gives you online access to the DAS case management system Debt Arrangement Scheme Hub (DASH). This has been developed to provide you with information on the lifecycle of your DAS case. Your money adviser will provide you with log on details and a password which will allow you access to the online system to review the status of your case. Further information on how to access DASH can be found on or by contacting the DAS Administrator. 15

18 5. ALTERNATIVES TO DAS A trust deed can become protected. This means that your creditors cannot take court action against you for the debt(s) that you owed when the trust deed was agreed provided that you meet the terms of the trust deed.

19 Debt Management Plan (DMP) A voluntary agreement between you and your creditors to make a set payment toward your outstanding debt. DMPs are managed by firms known as Debt Management Companies, who negotiate with your creditors and manage the payments on your behalf. Your agreed payments are based on how much you can afford to pay. These payments are distributed between all your creditors. When your debt management plan is being set up, your creditors may agree to freeze any interest charges but are not obliged to do so. Your creditors are still entitled to take action to enforce payment of your debt(s) whilst you are subject to a DMP. Voluntary DMPs do not offer the same security as a DAS DPP. Please note that some Debt Management Companies charge for the provision of advice and ongoing administration of a DMP. You should check this with your chosen adviser prior to entering into any agreement. Trust Deed A formal arrangement where a debtor conveys his estate to a trustee for the benefit of his creditors. The trustee must be a licensed insolvency practitioner. To enter into a trust deed you must either have assets that can be sold or you must be able to make regular payments to your trustee from your income. A trust deed can become protected. This means that your creditors cannot take court action against you for the debt(s) that you owed when the trust deed was agreed provided that you meet the terms of the trust deed. 17

20 If your creditors do not agree to your trust deed becoming protected, they can still take court action against you. If you do not co-operate with your trustee, your trust deed may fail and your creditors can take legal action to recover what you owe them, including making you bankrupt. Your trustee can also make you bankrupt if you do not co-operate with them. It is important to note that your trustee can apply to make you bankrupt at any time during the trust deed, if they think that this would raise more money for creditors, although this does not happen often. Bankruptcy Bankruptcy is a legal declaration that someone cannot pay their debt(s). If you are declared bankrupt, control of things that you own, including your home, are passed to your trustee. You may also be required to make a regular payment from your income. Details of individuals who are bankrupt or have granted a protected trust deed are recorded on the public Register of Insolvencies. For further information on the above alternatives to DAS please contact your local Money Advice Centre or Citizens Advice Bureau. 18

21 6. CONTACT INFORMATION AND ADVICE SOURCES Getting advice as soon as possible can help you to deal with your debts.

22 To get more information on DAS and alternative debt relief and management options, contact: DAS Administrator Accountant in Bankruptcy 1 Pennyburn Road Kilwinning Ayrshire KA13 6SA Telephone: Fax: das@aib.gsi.gov.uk (for general information on the DAS) Website: For free advice on debt contact: Money Advice Scotland Telephone: Website: info@moneyadvicescotland.org.uk Citizens Advice Scotland Telephone: Website: National Debtline Telephone: Website: Trading Standards Scotland Website: There are other organisations which can provide you with alternatives to entering DAS. Some of these organisations may charge a fee for their services. You can find the contact details for these organisations in your phone book.

23 This publication is available on request in community language versions and alternative formats. Please contact for this to be arranged Tha am f oillseachadh seo ri fhaot ainn air iarrt as ann an cànanan coimhearsnachd agus ann an cruthan eile. Cuiribh fios gu air son seo a chur air dòigh. We have written this booklet for general guidance only. It is not a detailed or full statement of the law. 21

24 To get more information on DAS and alternative debt relief and management options, contact: DAS Administrator Accountant in Bankruptcy 1 Pennyburn Road Kilwinning Ayrshire KA13 6SA Telephone: Fax: das@aib.gsi.gov.uk (for general information on the DAS) Website: supported by APS Group Scotland DPPAS11878 (08/11)