Debt Arrangement Scheme. The Debt Arrangement Scheme (DAS) Debtor Information Booklet Individual DAS. on a positive note

Transcription

1 Debt Arrangement Scheme The Debt Arrangement Scheme (DAS) Debtor Information Booklet Individual DAS on a positive note

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:

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? 2.8 Review and Appeals 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 break? 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. You must include all your debts in the DPP application. Your DPP will take into account what you can reasonably pay back at regular intervals based on your disposable income. If you are an individual person applying for DAS 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 DAS Administrator or money adviser submits the application for a DPP to creditors for approval, 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. You can also apply for DAS if you are not an individual, this is called Business DAS (if this applies to you please see the Debtor Information Booklet for Business DAS, which can be found on the DAS website). 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 the DAS Administrator or money adviser submits the application for a DPP to creditors for approval, and this is waived on completion of the DPP 3

6 provides protection from creditors taking enforcement action to recover money owed to them, and is often free for people paying debt under an approved DPP. However, some money advisers may charge a fee for their service. If a money adviser is charging a fee, they must also disclose them amount of fees that will be charged for the services provided in a DPP and provide you with the name of a money adviser that can provide this service fee of charge. 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 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;

7 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). 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. Normally you are ineligible to participate in DAS if you are paying a debt(s) under a conjoined arrestment order. However, 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 eligible 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). 5

8 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. 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 are each liable for a debt which may be included in a DPP 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. Business DAS is also available if you are a legal person or other entity, which includes; a partnership, a limited partnership, trust or unincorporated body of persons. (See the Business DAS debtor information booklet for more details available on the DAS website.) 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.

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. 7

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 your only source of income is benefits, then you may also be able to apply for DAS, but must have available surplus income to make payments. 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. You must include all debts owed in your application, except where a continuing liability exists. 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. 8 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.

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 42 days of the date your DPP is 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 may apply to the DAS Administrator for a review of the decision to reject the DPP. This request must be made on any ground that would be raised in an appeal to a sheriff. If the decision is not changed at the review stage you have the right to appeal to a sheriff on a point of law against the DAS Administrator s decision. 9

12 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. 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 notify The Accountant in Bankruptcy that you intend to apply for a DPP and this is done by completing a moratorium application or submitting a written request. If the moratorium application or your written request is accepted it 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 moratorium application in any 12 month period, unless you have been in a joint DPP which has been revoked. In this case, you may submit a further moratorium application prior to your application for a sole DPP. 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. 10

13 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. 2.8 Reviews and Appeals A creditor named in the application for a DPP may, on any ground which may be raised in an appeal to a sheriff, apply to the DAS Administrator for a review of a decision taken by the DAS Administrator to: approve, refuse or revoke a DPP; determine a debt in a DPP; attach a discretionary condition in a DPP; dispense with creditors consent; and approve or refuse a variation. A debtor may, on any ground which may be raised in an appeal to a sheriff, apply to the DAS Administrator for a review of a decision made by the DAS Administrator to: refuse a DPP application; determine a debt in a DPP; attach a discretionary condition to a DPP; approve or refuse a variation; revoke a DPP. A request for review must be sent directly to the DAS Administrator within 14 days of the date of the original decision made by the DAS Administrator. If the decision is not changed at the review stage the creditor or debtor may appeal to the sheriff on a point of law within 14 days of the date of the review decision. The decision made by the sheriff is final. 11

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

15 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 monthly payments and a further payment is due, 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 apply to the DAS Administrator for a review of the decision to revoke your DPP. This request must be made on any ground that would be raised in an appeal to a sheriff. If the decision is not changed at the review stage you have the right to appeal to a sheriff on a point of law against the DAS Administrator s review decision. 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 payment break of up to six months where their disposable income has reduced by 50% or more in the following circumstances: 13

16 a period of unemployment or change in employment; a period of leave from employment for maternity, paternity, adoption or to care for a dependant; 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 break 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 break? There is no limit to the number of times you can apply for a payment break provided you meet the necessary criteria. Before approving the variation, the DAS Administrator will take previous payment breaks into account as part of the decision-making process where appropriate. 3.5 How do I apply for a variation? You, your money adviser or a nominated person may apply to the DAS Administrator for a variation to the DPP. If you are in a joint DPP then an application must be made by both debtors. 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. 14

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

18 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. 16

19 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.

20 Debt Management Plan (DMP) A voluntary agreement between you and your creditors to make a set payment towards 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 on-going 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. 18

21 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. 19

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

23 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 Scotland 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.

24 Using your personal information Personal information that you supply to Accountant in Bankruptcy (AiB) may be used in a number of different ways, for example: to determine applications for bankruptcy and debt payment programmes for the collection of fees and contributions to identify and sell assets to supervise the administration of bankruptcies and Protected Trust Deeds for statistical analysis. We may share your information with, and obtain information from, third parties such as banks, credit reference agencies, creditors and local authorities for the purposes of handling your case. If you are made bankrupt, sign up to a Protected Trust Deed or apply under the Debt Arrangement Scheme (DAS), your details will be recorded in a public register available for anyone to access free of charge. Additionally, if you do not comply with the conditions of your bankruptcy you could be subject to a Bankruptcy Restriction Order (BRO) where your details will be made public in a press release and on the AiB website. Using your information in this way is required to allow AiB to act under the Bankruptcy (Scotland) Act 1985 and other relevant legislation. We, or an agent acting on our behalf, may also contact you to discuss your experience of using our service as part of our on-going commitment to customer service. However you will be given the opportunity to request that we do not contact you for these purposes. For further information about how your information is used and your rights to access information we hold about you, please contact: aib@aib.gsi.gov.uk 22

25 This publication is is available on request in community language versions and alternative formats. Please contact for this to be arranged Tha am ffoillseachadh seo ri 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 It is is not a detailed or full statement of the law.

26 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: An Agency of APS Group Scotland (03/15)