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Tackling your debts

How does DAS work?

Posted 08 April 2016

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DAS is one way to deal with unmanageable debts if you live in Scotland. Read on to find out more.

Today we’re going to explore the world of DAS, which stands for Debt Arrangement Scheme, and give you a thorough overview of how this particular solution works. By the end of this blog we hope you’ll better understand how this solution can help those with problem debt and also have an idea of whether it could be right for you. If you think it is, we’ll let you know how to get further advice.

What is DAS?

Before we get into the nitty gritty, we need to say that Debt Arrangement Scheme (DAS) is only available if you live in Scotland. If you live in another part of the country, there are other debt solutions you can look into.

DAS is a formal debt plan run by the Scottish government that helps people deal with debts they can’t pay back. When you start DAS, you agree with your creditors to pay a lower amount towards your unsecured debts each month. A Debt Payment Programme would be put in place which would mean that you could make one affordable weekly or monthly payment towards your debts. 

This means that if you start DAS, your payments are reduced to allow you to afford all your other essential outgoings. As a result you end up paying your debts back over a longer period of time, but at a rate that you can afford. 

The proposal for the lower payment will be sent to your creditors and they will each have 21 days to respond. If one of your creditors rejects the proposal, it will be sent to the DAS administrator and they will have the final say over whether it goes ahead. 

To apply for DAS you need to speak to a money advisor – someone specially trained to deal with this particular solution. If you’d like to look into this option further we have advisors here with this special qualification – just use the options to the left. Or you can check up on the health of your finances and take our money smart report below.

 

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The advantages of Debt Arrangement Scheme (DAS)

The main advantage of DAS is that you’ll no longer have to worry about being able to afford everything month-to-month. It’s designed to make sure you can live comfortably and pay your debts off at the same time. Having that strain lifted from your shoulders can be a major plus. 

Because DAS is legally binding it means that your creditors have to stick to it too. They won’t be able to take further action against you to try and recover what you owe, for example by starting court proceedings against you. DAS is designed to be fair to everyone involved and make sure that everyone sticks to the rules of the agreement.

Once you start DAS your creditors will freeze interest and charges on your debts as well. This is a huge advantage as it means that your debts won’t continue to grow as you’re paying them off. 

If one of your creditors has already said they want to take you to court, your money advisor can write to the DAS administrator to tell them you want to apply for DAS. This is known as intimation, and will protect you for 6 weeks from any court action from your creditors and give you enough time to set up DAS. 

Do I qualify for DAS?

As we mentioned earlier, to qualify for DAS you have to live in Scotland. You also need to be unable to afford your unsecured debts at the level that your repayments are currently set - there’s no minimum amount of debt that you have to have. 

You will have to have something left over from your income every month to put towards your debts. If you’re in a situation where you don’t think you have anything left over at all, have a look at whether Sequestration or Minimal Asset Process (MAP) could help you. 

Are there any downsides?

There are downsides associated with DAS - as there are with all debt solutions. This doesn’t mean that you shouldn’t look into starting DAS or another solution – it just means you need to be sure that the pros outweigh the cons for you before you go ahead. 

One of the downsides is that your credit score will be damaged. Even though your creditors agree to receive lower payments on DAS than you agreed to when you first borrowed from them, you’re still breaking the original contract you signed by paying less. This would show on your credit history, usually for six years, and may make it harder or more expensive to borrow over that time. Despite this, DAS can sometimes be the right way forward if it helps you avoid slipping further into debt. And if you’ve missed payments or defaulted on your debts, you may find that there has already been substantial damage done to your credit file. 

As you’re paying less each month you will end up paying your debts back over a longer period of time than you originally agreed. Having said this, you may find that you don’t mind extending the repayment term, as long as it means you’re able to afford all your outgoings and not worry about missing payments anymore. 

DAS will only be able to help you with your unsecured debts – you won’t be able to cut the payments on your secured debts like your mortgage and secured loans with this solution. However, you should find that it’s easier overall to afford your secured debts because your unsecured payments on DAS will be lower to make allowances for any secured payments you have to make. 

There is a DAS register which is a record of anybody on a DAS, or in the process of applying for a DAS DPP. Although this register is publically accessible, it is normally used by creditors and credit reference agencies. 

If you don’t comply with the conditions of the DPP then it could be revoked and the creditors could reapply all of the interest and charges that they had frozen. As the agreement would be broken they would also be able to take further action to get the money back. 

So, that’s how DAS works in a nutshell.  If you would like more information, why not visit our dedicated Debt Arrangement Scheme page? If you’re struggling with debt and you want some guidance on the debt solutions available and which one would be best for you, then why not get in touch using the options to the left.

 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.