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If you’re struggling to make sense of the differences between a DMP and DAS in Scotland, wonder no longer. Our guide makes sense of them all.
A Debt Management Plan (DMP) is a solution that makes your unsecured debts affordable by agreeing to new repayment terms with your creditors. A DMP would mean that you pay the whole amount that you owe back, but over a longer period than you originally agreed.
However, if you live in Scotland there’s an alternative solution available: the Debt Arrangement Scheme (DAS). Let’s look more closely at some of the differences and similarities between the two.
As we mentioned, DAS is only available in Scotland. If you live in England, Wales or Northern Ireland, you could consider a Debt Management Plan instead.
Scotland has a number of unique debt solutions that are only available north of the border. You can find out more about these here, or learn about the debt solutions that are available in England, Wales and Northern Ireland here.
DAS is a formal solution
While a DMP is an informal solution, DAS is part of Scottish law. This means that once you and all your creditors have agreed to it, you are all legally bound to stick to it. As long as you stick to the agreement, your creditors will not be able to take action against you to get back what you owe them
A DMP, on the other hand, is informal, which means that your creditors don’t have to stick to it. However, in our experience, most creditors do keep to the terms of a DMP if they can see that you are paying everything you can towards your unsecured debts.
DAS is set up through a money advisor
To start DAS, you need to go through a qualified money advisor like us. We will draw up a Debt Payment Plan (DPP) that sets out what you can afford to pay towards your unsecured debts each month and send it to your creditors. If your creditors agree, they will be legally bound to accept these new repayments. And if one of them objects to the DPP, your money advisor will send it to the DAS Administrator, who will have the final say.
You do not need a qualified professional to set up a Debt Management Plan. You could speak with your creditors yourself and negotiate lower payments with them. However, this may feel quite daunting if you’re not confident speaking to your creditors or you have multiple debts you need to deal with, which is why some people prefer to set up a DMP through an experienced debt advisor like us.
Any advice you get from us is free of charge, but fees may be payable for continuing services. You can find out more about them here.
Your interest and charges will be frozen with DAS
On DAS, any interest and charges attached to your debts will be frozen, which means they won’t pile up as you pay your unsecured debts off over a longer time period.
Because a DMP is not a formal solution, your creditors don’t have to freeze interest and charges. However, again, in our experience, they usually do if they can see that you’re putting everything you can afford towards your debts. If you were to put a DMP together with us, we would try to negotiate with your creditors so that they agree to freeze the interest and charges, giving you that added peace of mind.
You won’t have to deal with contact from your creditors
As part of DAS, your money advisor will draw up a DPP that details what you can afford to pay towards your unsecured debts each month. Once all your creditors agree to this, they have to stop chasing you for the money. This means an end to all the phone calls and letters – and hopefully an end to the stress they cause, too.
A DMP does not always mean an end to communication from your creditors. They can still get in touch, but if you’ve chosen to set up a Debt Management Plan through a provider like ourselves, you can forward any letters you get to us. And if your creditors call, you can give them our details and tell them we’re dealing with your creditors on your behalf.
There’s a public record of DAS
When your DPP starts, your details will be entered on to the DAS Register, which is a publicly accessible database. This is not the case with a DMP, where only your creditors, your debt advisor and anyone you share a debt with that’s included in the Plan will know.
The end is in sight
DAS gives you a date by which your unsecured debt repayments will be finished – providing you don’t take a payment holiday or alter your payments during this time. This date can act as a light at the end of the tunnel, as you know that each day you are closer to having completed your payments.
A DMP lasts as long as it takes you to pay back your unsecured debts. This isn’t really that different to DAS, except that there is no set end date with a DMP because your creditors could increase the interest or add charges, which would mean making payments for longer – although this is rare.
Your repayments will be more affordable
If you think that you can afford to repay your unsecured debts, but you simply can’t manage the repayments you’re currently being charged, both DAS and a DMP can help.
Both solutions involve working out a new payment plan and calculating your disposable income each month once you’ve paid all of your priority bills (mortgage/rent, secured loan repayments, council tax, utility bills, etc.). As well as your priority bills, these solutions will take into account what you spend on essential purchases like food, travel and clothing. What’s left over after that is divided between your creditors. So, you keep paying off your unsecured debts, but at a rate you can afford.
Only unsecured debts can be included
You can only include your unsecured debts on both a DMP and DAS. These are things like credit cards, personal loans, store cards, catalogue accounts and overdrafts.
Your mortgage cannot be included on a DMP, but rent and mortgage arrears can be included in DAS – although you might have a separate arrangement in place for this. Examples of debts that can’t be included on a DMP or DAS are loans secured against your home, hire purchase loans, child maintenance payments and court fines. However, because both DAS and a DMP make your payments towards your unsecured debts more affordable, you should find you have more money available to put towards your priority bills including your secured debts.
Your credit history will be affected
With both DAS and a DMP, you agree to make reduced payments to your creditors. Because these are not the payments you originally agreed to when you borrowed the money, this will show up on your credit history and remain there for six years from the date you started the solution.
A negative mark on your credit history makes it harder to borrow during this time and you may have to pay more interest. If you’re on DAS, you will need permission from the DAS Administer to apply for or take out credit.
You will be debt-free
Whether you live in Scotland and choose DAS or you’re based somewhere else in the UK and sign up to a DMP, you’ll know that by entering into this debt solution you are on the path to becoming debt-free. Providing you keep up with your new payments, you will pay back all of the money you owe that’s included in your DPP or DMP and be debt-free.
If you would like to find out more about whether DAS or a DMP are the right options for you, or whether another debt solution might be more suitable, you can contact us using any of the options on the left. You can also get free and impartial guidance from the Money Advice Service.
by Kyri LevendiBack to blog home