Debt Arrangement Scheme Guidance for creditors

Transcription

1 Debt Arrangement Scheme Guidance for creditors Foreword Most people want to pay what they are due, but some can only do so if they are given more time. A modern system of court enforcement protects debtors where reasonable. If a debtor needs time to pay, then they should be protected from further enforcement methods or from bankruptcy. Diligence is the Scottish name for methods of enforcing court decrees, and so this kind of protection is known as a diligence stopper. A diligence stopper is a form of debt management, rather than debt relief. It is a way for clients to avoid the damage caused by bankruptcy or signing a trust deed for creditors. In particular, debt management is a way for people to stay in their homes. Stopping diligence does not stop lenders and landlords recovering possession when rent or mortgage payments are missed, but it does make re-possession much less likely. Debt management is better for creditors. They also take damage when customers go bankrupt, or sign trust deeds. As a result it is often in creditors interests to agree some debt relief in order to give a debt management programme a fair chance of success. The Debtors (Scotland) Act 1987 introduced 2 diligence stoppers. The first is a time to pay direction, which a court can make when it grants decree. The second is a time to pay order, which a court can make when a creditor attempts to enforce a decree. Time to pay orders and time to pay directions are only available from the courts, and only apply to single debts. Though often used, they are of limited value where someone has multiple debts. As a result, the Scottish Executive introduced the Debt Arrangement Scheme as a third diligence stopper, for people with 2 or more outstanding debts. The Executive decided that people should not have to apply to the courts in order to use DAS. The Scottish Parliament approved DAS by passing the Debt Arrangement and Attachment (Scotland) Act 2002 (the 2002 Act). On 31 st March 2004 it approved the detailed rules set out the Debt Arrangement Scheme (Scotland) 1

2 Regulations Further amendments were approved in March 2007 by the Debt Arrangement Scheme (Scotland) Amendment Regulations 2007 and the Debt Arrangement Scheme (Scotland) Amendment No 2 Regulations These documents are referred to in this document as the DAS Regulations. The Scheme has 5 main players. They are the debtor, the creditor, the approved money adviser (acting on behalf of the debtor), the payment distributor, and the Scottish Executive (the DAS administrator). The money adviser applies to the DAS administrator for approval of the debt payment programme (DPP) proposed by the client. If the programme is approved, then the payments distributor selected by the money adviser divides the client s payment amongst the creditors. DAS builds on the model of existing voluntary repayment plans. This means that a money adviser who negotiates repayment plans will work in much the same way when setting up a DPP under DAS. The key ways in which a repayment plan and a DPP are the same are: that the client must want to repay their debts; that the money adviser works out the surplus income, and makes a pro-rata offer of payment to creditors; that the client and the creditors can reach whatever agreement suits them. If the creditors agree, then a DPP is automatically approved by the DAS administrator. However, a repayment plan and a DPP are different in important ways. It is these differences that make DAS a more effective tool. The key differences between a repayment plan and a DPP are: DAS is a statutory scheme, and has the force of law; interest, fees, penalties or other charges which are not owed at the date a DPP is approved are not payable unless the DPP is revoked and ceased to be owed on completion of the programme; that if a creditor says nothing, they are presumed to agree (deemed consent); DAS is flexible: a DPP can be varied whether or not the creditors agree; and the fair and reasonable test applies where there is incomplete agreement, and means that a DPP can, in principle, match any circumstances. when a DPP is approved the client is freed from the threat of: arrestment, attachment, and other diligences; and bankruptcy. 2

3 One result of this difference is that DAS restricts creditors' rights. There is therefore a strong public interest in how DAS is used, and that is why money advisers need to be approved by the DAS administrator. In this guidance the Scottish Executive states its views on what DAS is, and how the laws set out in the 2002 Act and 2004 and 2007 Regulations should be applied. It is intended to be a helpful guide that creditors can use to inform the decisions that must be made when their agreement is sought to a DPP under DAS. This guidance does not itself have the force of law. Interpretation of the law is a matter for the courts, rather than the Executive. Creditors should therefore remember that, sometimes, legal advice will be needed. This guidance is a living document, and will be changed and expanded as the need arises. The most up to date version can always be found on the DAS website at DAS Administrator Telephone Pennyburn Road Fax number KILWINNING E mail das@aib.gsi.gov.uk KA13 6SA June

4 Contents 1 Introduction 2 The approach 3 Moratorium on diligence 4 The application for a DPP 5 Approval of a DPP 6 The effect of approval 7 Determination of debt by the DAS administrator 8 Variation of a DPP 9 Revocation of a DPP 10 Completion of a DPP 11 Appeals 12 The DAS register 13 Optional payments Appendix 1 Fair and reasonable Appendix 2 Standard conditions Appendix 3 Discretionary conditions Appendix 4 The registers Appendix 5 Debts which can be recovered outside DAS 4

5 1 Introduction 1.1 The Debt Arrangement Scheme (DAS) has been introduced by the Scottish Executive and endorsed by the Scottish Parliament. It provides a means for people who are in debt to pay those who have given credit to them. 1.2 DAS is a debt management scheme. This means that the starting point is that the person in debt is to pay their creditors in full. Thus it is different from sequestration (bankruptcy) and protected trust deeds which are debt relief measures where, on average, only a small proportion of the debt is repaid to unsecured creditors. 1.3 The Debt Arrangement Scheme only applies to debtors who live in Scotland. However, if you are a creditor elsewhere in the UK, or even abroad, you can be involved in a debt payment programme because the debtor lives in Scotland. 1.4 An approved debt payment programme under the Debt Arrangement Scheme freezes the interest, fees, penalties and other charges on debts included in the programme. This is explained further in section 6. 2 The approach 2.1 If someone owes money, and finds that they cannot pay all their creditors, they might seek advice. Money advisers should look at all the options available to a debtor. A debt payment programme (DPP) under DAS is one of these options if the debtor has some surplus income after they have made their essential payments (mortgage, fuel, food costs, etc). 2.2 If the debtor is considering a DPP, they must go to a money adviser approved by the DAS administrator to work on DPPs. Information on how to do this is available on the website at The money adviser will write to you to tell you that the debtor is unable to meet their contractual obligations. They should at this point provide you with a mandate signed by the debtor giving them authority to act for the debtor. If they do not provide you with a mandate, you should ask to see it. If it is still not forthcoming, please inform the DAS administrator. 5

6 The DAS administrator can be contacted at: DAS Administrator Telephone Pennyburn Road Fax number KILWINNING E mail das@aib.gsi.gov.uk KA13 6SA 2.4 At this stage the money adviser will ask you to confirm: the principal debt. This is the amount of credit you originally made available to the debtor, or which the debtor agreed to pay you; the interest rate; the original term of the debt; the contractual payments. That is, the payments that the debtor contracted to pay; the balance outstanding. That is the amount the debtor still owes you; the amount of arrears. That is, the amount that the debtor has missed paying you; any charges that may be incurred. For example, penalty charges on missed payments. These charges must have been stated in the original contract; and details of any existing payment protection insurance. 2.5 At this stage, neither you nor the debtor are committed to a DPP. The money adviser and debtor are assessing the options. 3 Moratorium on diligence 3.1 General The Bankruptcy and Diligence etc (Scotland) Act 2007 introduced amendments to the Debt Arrangement and Attachment (Scotland) Act 2002 to introduce through regulations two moratoria on diligence for a debtor who intends to apply for, or has applied for, a DPP The first moratorium applies for a 6 week period from the date an intimation of an intention to apply for a DPP is received by the DAS administrator and entered onto the DAS Register The second moratorium applies from the date the application for a DPP is received, entered on the DAS Register, to the date the decision to approve or reject the application is made by the DAS administrator. 6

7 3.1.4 An intimation can be made by a debtor or an approved money adviser. 3.2 Diligence in the period before a debt payment programme is applied for If required a debtor can be provided with protection from diligence under regulation 31A(1)(a) for a period of 6 weeks from the date they intimate to the DAS administrator that it is their intention to apply for a DPP under regulation 22(2A) In accordance with the above regulation 22(2A) a debtor may only make one intimation to the DAS administrator within a 12 month period During the 6 week period it will not be competent for a creditor to serve a charge for payment or commence or execute any diligence on any debt owed by the debtor. A creditor will also be unable to make an order under section 97(2) or section 136(2) of the Bankruptcy and Diligence etc (Scotland) Act 2007 granting warrant for sale of attached land or a satisfaction order. A creditor will be unable to lodge a petition for bankruptcy during this period The period will commence from the date the intimation is received by the DAS administrator and entered onto the DAS Register The entry on the DAS Register will be removed or amended on the date of the earliest of the following events: 6 weeks from the date entered on the register have elapsed; or the date a notice is entered on the DAS Register that a DPP is approved; or the date a notice is entered on the DAS Register that an application for a DPP has yet to be approved. 3.3 Effect of an application for a debt payment programme following an intimation If an application for a DPP is received by the DAS administrator within the 6 week period of the moratorium the DAS Register will be amended accordingly: an approved programme for automatic approval cases; or 7

8 a programme that is yet to be approved for cases which require a decision by the DAS administrator. 3.4 Effect of rejection of an application for a debt payment programme following an intimation Protection from diligence will cease from the date of rejection of the application for a DPP If the 6 week period has not elapsed the entry on the DAS Register will be amended to show application rejected. This entry will remain on the DAS Register until the 6 week period has elapsed. 3.5 Effect of withdrawal of an application for a debt payment programme following an intimation Under regulation 20(3) in the period between an application for a DPP being received and a decision being made the debtor may inform the DAS administrator that they wish to withdraw this application The debtor or money adviser must inform the DAS administrator in writing if the debtor wishes to withdraw their application for approval Protection from diligence will cease on the date the DAS administrator enters the withdrawal If the 6 week period has not elapsed the entry on the DAS Register will be amended to show application withdrawn. This entry will remain on the DAS Register until the 6 week period has elapsed. 3.6 Diligence in the period before a debt payment programme is approved Any application for a DPP in which all creditors consent will automatically be approved by the DAS administrator and will generate an entry on the DAS Register an approved programme. The debtor is provided with protection from diligence as set out in the Act from the date of approval of the DPP. The date of approval will take effect in accordance with regulation 28(2). 8

9 3.6.2 Any application for a DPP in which some of the creditors do not consent and where the DAS administrator is required to make a decision will generate an entry on the DAS Register a programme that is yet to be approved. The debtor will be provided with protection from diligence for the period set out in regulation 31A(1)(b The entry on the DAS Register will be amended on the date a notice is entered on the DAS Register that a DPP is approved. The debtor is then provided with protection from diligence as set out in the Act from the date of approval of the DPP. The date of approval will take effect in accordance with regulation 28(2) The entry on the DAS Register will be removed on the date on which a notice of rejection of the application for a DPP is entered; or the date on which the debtor under regulation 20(3) advises the DAS administrator that they wish to withdraw their application. Protection from diligence will cease on this date. 4 The application for a DPP 4.1 Before applying for a DPP, the money adviser must formally put a proposal to you on form 4 (proposal to creditor for a debt payment programme). This form will be completed and sent to each creditor. The form is designed to give all the information needed for you to make a decision. It gives as much information as possible so that you can correctly identify the debt and understand the payment proposal being offered. It should clearly state on the form: the total amount the debtor owes you; the amount you will receive each instalment; the frequency of the proposed payments to you; and the proposed length of the debt payment programme. You should check the details on the form. If there are any errors, you should contact the money adviser at once. Note: that in calculating this offer, the money adviser will have calculated the debtor s surplus income using, as a base line, the 9

10 trigger figures for expenditure as detailed in the nationally agreed, BBA and MAT partner agencies income and expenditure form (Common Financial Statement). 4.2 If you wish to respond to the proposal on form 4, you must do so within 21 days. The 21 days starts on the day after the date of posting or electronic transmission to you. The form has a section called form 4a at the end, which you can use for your response. 4.3 Section D of the Important Information for Creditors contained in Form 4 provides an explanation of the discharge of obligation of a debt on completion of a DPP. On receipt of the Form 4 you are advised to contact the money adviser if you do not agree with the figure quoted. 4.4 There are 3 possible responses from each creditor: Consent - this is where you write back within the 21 days and agree to the proposal. Deemed consent - this is where you do not respond to the proposal within the 21 days. In this case, you are deemed to have agreed to the proposal. Non-consent - this is where you write back within the 21 days and do not agree to the proposal. There is space provided on the form 4a for you to state your reasons for nonconsent. Any information provided will be passed to the DAS administrator by the money adviser and will be taken into account should the DAS administrator require to make a decision if the programme is fair and reasonable (see appendix 1). 4.5 Form 4a has boxes for your bank details. It is in your interests to provide bank details even if you do not consent to the DPP. If the DPP is agreed, and your bank details are not available, then there will be a delay in making payments to you. Please note that the provision of bank details will not be treated as implying consent to the application, and therefore will not affect the decision making process of the DAS administrator. 4.6 At the end of the 21 days, the money adviser and debtor need to consider all the creditors responses and whether it is appropriate to apply to the DAS administrator for a DPP. In coming to this decision they will take into account the following. If all the creditors consent (or are deemed to have consented) to the DPP, the DAS administrator will approve the DPP 10

11 regardless of the amount of the debt or the length of the proposed programme. The DAS administrator can dispense with the consent of a creditor, where the programme is otherwise fair and reasonable. 4.7 In deciding whether a programme is fair and reasonable, the DAS administrator will take into account a number of criteria which are set out in appendix 1. 5 Approval of a DPP 5.1 If a DPP is approved, standard conditions with which the debtor must comply will always be attached to it. These are listed in appendix 2. Further conditions may be requested by the money adviser and stipulated by the DAS administrator where the debtor s particular circumstances indicate. These are called discretionary conditions and are listed in appendix When the DAS administrator requires to make a decision to approve a DPP the money adviser will be advised and the DAS register will be updated to show an application for a programme that has yet to be approved. 5.3 Upon automatic approval or approval by the DAS administrator of a DPP the register will update to show an approved programme. 5.4 A DPP will be approved from midnight on the day immediately preceding the date on which the notice was entered on the DAS Register. (A DPP approved on 1 February 2007 will be approved from midnight on 31 January 2007). 5.5 On receiving confirmation of the approval of the DPP, the money adviser will notify all the other parties concerned. These are: the debtor. each creditor known to the adviser. the clerk of the appropriate court if there is; a conjoined arrestment order (using the appropriate form); a time to pay order under either section 1 or section 5 (time to pay orders) of the Debtor s (Scotland) Act 1987; or 11

12 a time order under section 29 (time orders) of the Consumer Credit Act the debtor s employer if (and only if) payments are to be made from the employer directly to the payment distributor. The debtor must then complete a form 6 (payment instruction to an employer). the debtor s employer if (and only if) an earnings arrestment is in place. any party if (and only if ) they have possession of funds or property that has been arrested. the payments distributor. The payments distributor will need to be given full details of the payment plan so that the correct arrangements can be made to receive money from the debtor and to make payments to you and the other creditors. 5.6 The Debt Arrangement Scheme legislation provides that a participant in a DPP will make a single periodic payment to a single point, the payments distributor. The payments distributor will then split the amount up and pay the amounts specified in the DPP to each creditor, taking into account the creditor s preference for method of payment. 5.7 The payments distributor will not charge you more than 10% of the payment for their services in distributing the money owed to you. 5.8 When a DPP is approved, the money adviser will give your details to the payments distributor. The payments distributor will contact you to arrange: how the debtor s payments will be made to you; and how you will make payments to the payments distributor. There are two options. Either the payments distributor will invoice you, or they will deduct your payments from each instalment. 5.9 If the DPP is not approved, you will be informed by the money adviser. The debtor s name will be removed from the register. If the programme is not approved and a debtor has previously made an intimation to the DAS administrator of their intention to apply for a DPP and the 6 week period from the date the intimation was received and entered on the register by the DAS administrator has not elapsed the register will be updated to show application rejected and this will be removed on the expiry of the 6 week period. 12

13 6 The effect of approval 6.1 Subject to the terms of any agreement under regulation 34 any interest, fees, penalties or other charges which are not owed on the date of approval but which may have been owed after this date will no longer be owed if the DPP is completed. 6.2 The total amount of the debt owed to any creditor will be the amount stated on the Form When a DPP comes into force, it impacts on any existing attachment or arrestment against earnings or property. The approval of a DPP has the effect of a recall of such attachment or arrestment from the date of approval of the DPP and the approved money adviser will notify each employer or party with possession of funds or property arrested. 6.4 The DPP means that any conjoined arrestment order is recalled from the date of approval of the DPP. The money adviser will recall these. 6.5 If you have attached any of the debtor s property, you can remove the attached property if the debtor and anyone else in possession of the attached article has already been notified of the date of the auction. [See the Debt Arrangement and Attachment (Scotland) Act 2002, section 27(4)]. If an article has been removed, or notice has been given that it is to be removed, under an exceptional attachment order, the DPP will not prevent the article from being auctioned. [See the Debt Arrangement and Attachment (Scotland) Act 2002, section 53] 6.6 You will be unable to make an order under section 97(2) or section 136(2) of the Bankruptcy and Diligence etc (Scotland) Act 2007 granting warrant for sale of attached land or a satisfaction order. 6.7 If there is an inhibition in place when a DPP is approved, this is unaffected. 6.8 Generally, you must not extend more credit to the debtor whilst they have a DPP. The only exceptions are: credit approved by a variation of a DPP (see section 6 below); 13

14 further credit given as part of a cyclical loan agreement which was already in operation when the DPP was approved. In this case, the payment by the debtor in the DPP must not vary because this credit has been given; trade credit incurred by the debtor in the ordinary course of business. If the debtor applies for this credit, they must give you a form 5(a) (short form of notification of approval of a debt payment programme); credit for emergency repairs as specified in the regulations. If the debtor applies for this credit, they must give you a form 5(a); and credit for reasonable funeral expenses for an immediate family member. If the debtor applies for this credit, they must give you a form 5(a). If you give credit to the debtor for any of the above reasons, the debtor must repay you at the contracted rates. The DPP may need to be varied either to reflect that the debtor has less surplus income, or indeed to include the new credit. You may not take any of legal actions available to enforce payment of a debt (see 5.10 below) as you have been given notice of the DPP (see section 4(5) of the Debt Arrangement and Attachment (Scotland) Act 2002). 6.9 Although there is a condition placed on the debtor not to apply for credit except in the circumstances outlined in paragraph 5.8 above, you should check the DAS register when offering credit to anyone If credit is given to a debtor who has informed you they are in a DPP, then you will still be able to seek a decree against the debtor, but you will not be able: to serve a charge for payment in respect of; commence any diligence to enforce payment of; or found on (that is, use as a basis) in presenting, or concurring in the presentation of, a petition for the sequestration of the debtor s estate, the debt due to the debtor as long as the DPP is in force. In other words, if you do give credit, you will not be able to take action to recover this new credit until after the DPP is completed or revoked. However, default in payment would be grounds for revocation. If you have given credit because the debtor has not informed you that they are in a DPP and you have not previously been informed of the approval of a DPP, you would be able to execute diligence or seek revocation (see section 7 below). 14

15 If you are a creditor who is not taking part in a programme, you cannot apply for the revocation of a programme unless you have not been informed of the programme. If you have not been informed of the DPP, you can execute diligence or petition for the debtor s sequestration (see section 4, paragraph 5(b) of the 2002 Act). If there is an award of sequestration, the money adviser must apply for revocation on the grounds that the debtor has not complied with a standard condition (regs 43(b) and 29(2)(d)) You must not try to persuade a debtor to withdraw from a DPP or to make additional payments in respect of a debt included in the programme. If you are a creditor organisation which has administrative systems which electronically generate reminder letters or demands for payment, you should take care that you do not inadvertently breach this provision You must, on request by a money adviser acting for a debtor, provide a statement of all the debtor s liabilities and must also notify a money adviser of any liability where you have security against a co-obligant of the debtor The DPP does not affect a secured creditor s right to repossess heritable property nor their right to review monthly payments to realise their security as long as that re-assessed payment does not include an element to recover arrears It should be noted that any period during which a debt payment programme approved under the Scheme subsists is ignored for the calculation of prescription in relation to a debtor s obligation to pay and the prescriptive period will be lengthened accordingly. The period during which a debt is included in a debt payment programme and administered under the Scheme is disregarded for the purpose of the creditor exercising any rights or remedies to enforce any part of the debt which remains due. 7 Determination of debt by the DAS administrator 7.1 Subject to the terms of any agreement under regulation 34 any interest, fees, penalties or other charges which are not owed on the date of approval but which may have been owed after this date will no longer be owed if the DPP is completed. 7.2 The total amount of the debt owed to any creditor will be the amount stated on the Form 3. 15

16 7.3 If you do not agree with this figure Regulation 49A(3) allows for a creditor or debtor to ask the DAS administrator to determine the total amount due as described in section If you ask the DAS administrator to determine the amount of the debt you will be required to submit evidence to support your request. 7.5 When the DAS administrator makes a determination of the debt she will inform the debtor, the creditor who made the application and the money adviser of her decision. 7.6 If the decision is that the amount will remain as the figure on the Form 3 the DPP will continue unchanged. 7.7 If the decision is that the amount is to be amended to the figure determined by the DAS administrator this will be the amount owed for the DPP to be completed. 7.8 The DAS administrator will then ask the money adviser to submit a variation to the programme. 8 Variation of a DPP 8.1 There are situations where it is appropriate for a DPP to be varied. Variation can result in one or more of a number of changes: the amount you receive might be increased; the amount you receive might be reduced; the length of the DPP might be reduced; the length of the DPP might be increased; or a new condition(s) might be attached to the DPP. 8.2 The DAS administrator will decide whether there will be a variation. An application has to be made to the DAS administrator on form 8 (application for a variation of a debt payment programme). Such an application may be made by: you; another creditor; or the money adviser on behalf of the debtor. 8.3 Before you apply for a variation, you must try and agree the change with the money adviser. The DAS administrator will not consider your application unless you have made a reasonable attempt to do 16

17 so. If you agree the variation with the money adviser they will make the application 8.4 The DAS administrator can only agree a variation in a limited set of circumstances. These are known as the grounds for variation and apply whether you, or another creditor, or the money adviser is seeking a variation. They are: where a debtor agrees with all the creditors that the programme should be varied; where the DAS administrator or sheriff has made a determination of the total amount of a debt due at the date of approval of a programme; where there is a material change of circumstances that means that the debtor has an increase in surplus income. A variation can be used to increase the instalments paid to creditors and thus pay off the DPP more quickly. Note that the money adviser must review the debtor s situation every 12 months; where there is a material change of circumstances that means that the debtor has a decrease in surplus income. A variation can be used to decrease instalments paid to creditors and extend the DPP whilst still allowing the debtor to pay off their debts. Note that the money adviser must review the debtor s situation every 12 months; where a debtor and a creditor agree that the debtor no longer needs to pay the creditor what is owed; when a debt due at the approval of the programme was omitted from the DPP because it was overlooked, or someone made a mistake; where a future debt, which was not quantifiable when the DPP was approved, becomes due for payment. This might happen, for example, if the debtor has credit which they do not have to start paying off for some months; where a contingent debt, which was not quantifiable when the DPP was approved, becomes due for payment. This might happen if the debtor has been a guarantor for someone else s debt and the creditor has called up the guarantee; and if the debtor has an emergency and needs credit to meet an essential requirement. There are a lot of possibilities here, for example: the debtor s house needs repairs to make it sound (dry rot, leaky roof, broken window, etc); a car needed for business or to get to work needs repairs; the washing machine breaks down; 17

18 there is a medical emergency that needs some payment; the debtor needs the services of a plumber or electrician; or the debtor needs help to pay for the funeral of an immediate family member. Nobody can apply for a variation for any other reason. 8.5 If you are applying for a variation, you must send a copy of the application to the money adviser, the debtor, and all the other creditors. If you do not know the details of the other creditors, you can ask the money adviser to send these copies to them. If the money adviser or another creditor applies, they will send you a copy of their application. 8.6 When the DAS administrator receives the application, she will record it in the DAS register as an application for a variation of an approved programme and will notify the money adviser that the application has been received. 8.7 When considering an application for variation, the DAS administrator will take into consideration: the total amount of debt; the length of time the programme will operate under the variation; the method and frequency of payments under the variation; any comment made by the money adviser; any of the debtor s assets which could be realised to pay off debts; the views of the debtor; the views of any creditor taking part in the DPP and the creditor making the application if they are not already in the DPP; any other factor the DAS administrator considers to be important. Note that your view is taken into consideration whether or not you have made the application. Creditors have 14 days from the intimation date of the variation proposal to forward comments to the DAS administrator. Contact details can be found in section If an application for variation is approved, the money adviser will inform you and tell you what effect the variation will have on you. 18

19 Also, the DAS register will show a variation of an approved programme. 8.9 If an application for a variation is not approved, the money adviser will inform you. The DAS administrator will have given the money adviser the reasons for the decision not to vary the programme. The DPP and the DAS register will go back to the status they were at before the application for variation. 9 Revocation of a DPP 9.1 A DPP is automatically revoked if the debtor petitions for their own sequestration and the sheriff awards it. In such cases, the DAS administrator will remove the debtor s name from the DAS register and inform the money adviser who will inform you. All payments being made to you under the DPP will stop. All other revocations follow an application to the DAS administrator for revocation. 9.2 An application for revocation can be made by: you; another creditor taking part in the programme; the money adviser on behalf of the debtor; or the DAS administrator under regulation 43(2). 9.3 The only circumstances when you or another creditor can apply for a revocation of a DPP are: if a debtor does not have a money adviser without reasonable cause; if a debtor fails to satisfy any condition the DPP is subject to, without reasonable cause. These include both the standard conditions (appendix 1) and any discretionary condition applied to the DPP (appendix 2); a payment to be paid under the DPP becomes due and a sum due for previous payments of not less than the total of 2 payments is outstanding. This means that the debtor owes more than the sum of 2 instalments and has missed or underpaid at least 3 instalments; or if a debtor makes a statement in an application (whether for approval or variation) which the debtor knows to be untrue. 9.4 If you or another creditor apply for revocation of a DPP, there is no obligation to inform the money adviser, the debtor, or the other 19

20 creditors. However, the DAS administrator will inform the money adviser who will inform the debtor so that the debtor has an opportunity to make a statement to the DAS administrator. The money adviser has 14 days from the intimation date of the revocation proposal to forward comments to the DAS administrator 9.5 A DPP may be revoked by the DAS administrator when she is satisfied that for a continuous period of 6 months no payments have been received by the payment distributor. On notification from the payment distributor the DAS administrator will contact the debtor, the money adviser, all creditors being paid through the DPP and any creditor who has made an application for a variation of the DPP. The DAS administrator will not make a decision on the revocation for a period of 4 weeks of the date notification was issued. This is to give all interested parties an opportunity to make a statement to the DAS administrator. 9.6 The DAS administrator will make a determination on an application for revocation. However, you can appeal the DAS administrator s decision to the sheriff on a point of law (see 9.2). 9.7 When deciding on an application for revocation of a DPP, the DAS administrator will consider: whether the application complies with the grounds for revocation (as set out in paragraph 7.3 above); any statement made by or on behalf of the debtor; the nature of any failure or untrue statement; any factor that tends to indicate whether or not the programme will be successful; and any other factor that the DAS administrator considers appropriate. 9.8 If an application for revocation is rejected, the money adviser will inform you. The DAS administrator will have given the money adviser the reasons for the decision not to revoke the programme. The DPP and the DAS register will go back to the status they were at before the application for revocation. 9.9 If a DPP is revoked the debtor will become liable for all interest, fees, penalties and other charges that would have been payable to a creditor had the DPP not been approved. 20

21 10 Completion of a DPP 10.1 A DPP reaches completion in the following circumstances: At the end of the agreed term of the DPP. If the debtor makes all the payments as they have contracted to do, completion of the DPP will be at the time specified when the DPP was first approved, or if it has been varied, at the most recent variation. In this case, the debt in the DPP will have been paid in full. At the end of the agreed term of the DPP. If the debtor has missed or underpaid a few times, but this has not warranted a variation, completion will be when the debt in the DPP has been paid in full. This will be slightly later than the time specified when the DPP was first approved, or if varied, at the most recent variation. If the debtor makes an offer of composition which is accepted by you and all the creditors remaining in the DPP. If you and all the other creditors still in the programme agree in writing to completion before the scheduled end of the programme All interest, fees, penalties, and other charges which would have been owed if a DPP had not been approved will on completion of a DPP cease to be owed. The total amount owed to each creditor will be the sum shown on the form 3 unless the DAS administrator has issued a determination on a debt when it will therefore be the amount of the debt determined which shall be owed The money adviser will give you written notification of completion. 11 Appeals 11.1 Appeals can be made as follows: to the sheriff by: a debtor against the DAS administrator s decision not to approve a DPP; by a creditor named in a DPP application against a decision by the DAS administrator to either dispense with their non-consent or to approve a DPP; 21

22 by a debtor or a creditor who has applied for a variation on the grounds in regulation 38(1)(d) or (e) against the DAS administrator s decision to: attach a discretionary condition (appendix 2); approve, or refuse to approve, a variation of a programme; or revoke a programme. by a debtor or a creditor against a determination of the DAS administrator under regulation 49A(3) If you wish to appeal, it must be on a point of law. This is basically a mistake in the facts. However, not all factual mistakes will constitute a point of law and you may wish to take legal advice before considering making an appeal Appeals to the sheriff are by summary application. The procedure is set out in the rules of court In any appeal, the decision of the sheriff is final. This means that there is only one appeal allowed. It is not possible to appeal to the sheriff against a decision of the DAS administrator and then appeal that sheriff s decision to the sheriff principal The sheriff is a sheriff of the sheriff court district in which the debtor habitually resides. 12 The DAS register 12.1 The DAS administrator will maintain a web based register which will be accessible to actual and potential creditors on payment of a fee. The fees are currently: single inspection 5 one week weeks year The DAS register will contain the following information: a notice of intimation to apply for a debt payment programme; an application for a programme that has yet to be approved; an approved programme; an application for variation of an approved programme; a variation of an approved programme; and 22

23 an appeal to the sheriff The DAS register will also include for each debtor who has intimated an intention to apply for a debt payment programme, who has applied for approval of a debt payment programme, or who is taking part in a programme, a record of the debtor s: name, including any former name(s); age; home address or addresses; and business address (if any). It will also include the business address of the debtor s money adviser (or the money advice body for that adviser) You can find guidance on who can gain access to the DAS register and in what circumstances on the website at 12 Optional payments 12.1 In the list of standard conditions to be found at appendix 1, reference is made to continuing liabilities. These are defined in DAS regulations (reg 2) and relate to those sums (for example, rent, utilities, income tax, council tax) which are deducted from income when calculating the available surplus for distribution amongst creditors to pay debts. Normal payments of this type are not included in a DPP, although arrears can be included Provision is, however, also made for payment of continuing liabilities to be made through a payments distributor. The reason for this is that some debtors may consider it useful to be able to pay their ongoing liabilities by automated means at the same time as their debts. Creditors, some of whom fear that continuing liabilities may fall into arrears and become new debt, may welcome it. This may only be done where the debtor and the recipient of the essential payment have agreed to it and have reached agreement on who would be liable for the administration charge If you wish the debtor to pay a continuing liability due to you, you must negotiate with them (the money adviser may help with this). The payments distributor can charge you up to 10% for this service. You may ask the debtor to meet this cost. 23

24 Appendix 1 Fair and reasonable A1.1 Unless all creditors agree, the DAS administrator will only approve a DPP or a variation of a DPP if it is considered fair and reasonable [see regs 26(1); 39(2)(4)]. A1.2 The factors that the DAS administrator will consider in deciding whether a proposal is fair and reasonable are set out in regulations 26(2)(3); 39(4). These are: the total amount of debt; the period over which a programme will operate; the amount (if any) which appears, on the basis of information provided by the debtor or creditors, the value of any land owned by the debtor which exceeds so much of the total debt as secured by way of standard security over any interest in that land; the method, and frequency, of payments under a programme; an earlier proposed programme that was not approved; a matter specified in regulation 21(2) that would have prevented an application being made, where the matter no longer has that effect; the involvement of the debtor in a: debt payment arrangement, including a debt payment programme under these Regulations; time to pay direction under section 1 (time to pay directions) of the Debtors (Scotland) Act 1987, or time to pay order under section 5 (time to pay orders) of that Act; or time order under section 129 (time orders) of the Consumer Credit Act 1974; the extent to which creditors have consented (deemed or otherwise); any comment made by the money adviser; an asset of a debtor that could be realised to pay debts to be included in a programme; the views of a creditor taking part in the programme and of any creditor applying for variation; the views of the debtor; and any other factor considered appropriate. A1.3 The fair and reasonable test will be flexible enough to take into account the very different circumstances which applicants may be 24

25 in. If, in the view of a money adviser, an application is fair and reasonable they should submit it. However, in relation to the length of a programme, the DAS administrator is likely to approve anything under 5 years in duration and refuse to approve anything over 10 years. Between these periods will be a matter of individual assessment. A1.4 The level of payment considered fair and reasonable is likely to be subject to what payment distributors will accept. Any level of debt is likely to be acceptable. Information on what each payment distributor offers is available on the list of payment distributors kept by the DAS administrator. If there is any doubt, however, the money adviser should personally check with the payments distributor. 25

26 Appendix 2 Standard conditions (regulation 29) A2.1 These conditions state that that once a DPP is approved the debtor shall: make all payments under a programme as they fall due. pay a continuing liability when due for payment. make all payments in respect of credit obtained under regulation 35(1)(b)(iv), (v) and (vi) of the regulations as they fall due; give all notices and intimations which require to be given by a debtor under the principal regulations. except for a continuing liability, make no payment to a creditor taking part in a programme other than a payment under the programme. not apply for or obtain credit beyond that permitted by regulation 35(1)(b), or by a variation of a programme approved under regulation 39. notify the money adviser for a programme of any: change of address. material change of circumstances, within 7 days of becoming aware of the change. within 10 days after receipt by the debtor of a written request from the money adviser for the programme, supply the adviser with such information or evidence as the adviser may request in respect of the income, assets or liabilities of the debtor. A2.2 The intention is that if the debtor adheres to these conditions, the potential to secure completion of a debt payment programme will increase. 26

27 Appendix 3 Discretionary conditions (regulation 30) A3.1 As well as the standard conditions which apply to all DPPs, discretionary conditions may be attached. A3.2 The conditions specify that a debtor must: realise and distribute amongst the creditors the value of, an asset of the debtor other than an asset excepted by regulation 30(3); sign and deliver a payment instruction to an employer; seek agreement from a creditor to pay a continuing liability under regulation 34; complete and submit when due a tax or duty return or declaration; maintain an emergency fund in accordance with regulation 30(4); or be bound by any other reasonable condition intended to secure completion of the DPP (for example, if there is composition or waiver of interest, a condition might be set that the sum due by a debtor after discharge or waiver is paid in full, or that payment is made over the agreed period [reg 24(2)(a)&(b)]). A3.3 Regulation 30(3) defines an excepted asset as: a dwelling-house or mobile home occupied by a debtor as the debtor s home; and an asset that is exempted from attachment under section 11 of the Debt Arrangement and Attachment (Scotland) Act 2002 or is not a non-essential asset under schedule 2 of the Debt Arrangement and Attachment (Scotland) Act These provisions are aimed at ensuring that a debtor will: not lose their home; not be deprived of the means of working; and in the home, they will be left with essential furniture and other equipment. 27

28 Appendix 4 The Registers A4.1 The DAS administrator will maintain the following: the DAS register; the register of approved money advisers; and a list of approved payments distributors (non-statutory). A4.2 The DAS register A4.2.1 The DAS register will contain the following information: intimation under regulation 22(2A) an application for a programme that has yet to be approved; an approved programme; an application for variation of a approved programme; a variation of an approved programme; and an appeal to the sheriff. A4.2.2 The DAS register will also include for each debtor who has intimated an intention to apply or has applied for approval of a debt payment programme, or who is taking part in a programme, a record of the debtor s: name (including former names and aliases); age; home address or addresses; business address (if appropriate); and the business name and business address of the debtor s money adviser (or the money advice body for that adviser). A4.2.3 An entry on the DAS register may be inspected by: a money adviser on behalf of the debtor; a creditor (or prospective creditor) of a debtor; a payments distributor; and any other person who can demonstrate to the DAS administrator that they have a good reason to view the register. A4.2.4 No fee will be charged to an approved money adviser for an inspection of the DAS Register. All other inspections will be charged at the following rates: 28

29 single inspection 5 one week weeks 250 one year 500 A4.3 The register of approved money advisers A The register of approved money advisers will contain the following information: the money adviser s name the name of the money adviser s organisation (unless selfemployed); and the money adviser s business address and other contact details; and indicate whether the money adviser charges a fee. 29

30 Appendix 5 Debts which can be recovered outside DAS A5.1 Social Security and Child Support Debt A5.1.1 A5.1.2 The law provides specific legislative mechanisms for the recovery of social security debt, where benefits are administered by the Department for Work and Pensions (DWP), or in the case of housing benefit (HB) and council tax benefit (CTB), by a local authority. The law also provides a self contained legislative mechanism for the collection and enforcement of child support. The Debt Arrangement Scheme and its diligence stopper do not affect these legislative mechanisms. However, where DWP, or a local authority administering HB or CTB, recover debt using the usual methods of diligence, then the diligence stopper will apply. Child Support Child support maintenance is a continuing liability as defined by the Debt Arrangement Scheme (Scotland) Regulations All child support debts will be collected outside of a DPP and take priority over any other debt owed by the debtor. Collection and enforcement of child support continuing liability and arrears is unaffected by a DPP, except where the CSA seeks to enforce a liability order by diligence in the Scottish courts. The diligence stopper will apply to such action, but the CSA's other powers to collect and enforce the sum under the liability order and any other child support debt due are unaffected by the DPP. The CSA could therefore make an arrears agreement for example. The CSA's ability to impose a Deduction from Earnings Order for ongoing maintenance and arrears is not affected by a DPP. If the debtor's net income available to a DPP changes (for example because of a change in the amount of maintenance payable, fluctuations in a Deductions from Earnings Order or the making or variation of an arrears agreement) they should apply for variation of DPP on the grounds of a material change of circumstances. A5.1.3 DWP debt recovered by deductions from prescribed benefits DWP recovers debt such as benefit overpayment, social fund loans and child support current liability and arrears from prescribed benefits (see A5.1.4 below). If someone in receipt of a prescribed 30