What is a Debt Relief Order and how does it work?
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Live in Scotland and think you may need a debt solution? Our blog should help.
The Debt Arrangement Scheme, more commonly known by the abbreviation DAS, was introduced by the Scottish government to help people with unmanageable debts. It allows you some breathing space as, if your lenders agree to your Debt Payment Programme (DPP) proposal, all interest and further charges will stop and you’ll be allowed to pay off the remaining debts in smaller amounts over a longer period of time. It also allows you to pay off your debts in full, while keeping yourself out of insolvency and potentially having to release assets from, or sell, your home.
DAS is organised by an agency of the Scottish Government, called the Accountant in Bankruptcy and is run by the DAS Administrator. If you decide to enter into a DAS, you’ll be given your own DAS-approved Money Advisor.
Your Money Advisor will help you put together a schedule of payments, called a DAS Debt Payment Programme (DPP), which will detail the amount you are able to pay off per month to your lenders. This will be worked out to be affordable and sustainable for you, after your essential bills have been paid. Essential bills can include things like your mortgage or rent, food and council tax.
The DPP proposal is then presented to the lenders, who can at this point reject it if they don’t agree with the amount being offered. If they do, that doesn’t mean you won’t be able to enter into the DPP, as the DAS administrator has the authority to approve it, even if your lenders say no, if they still think it’s the best way for you to pay off your debts.
This arrangement lasts until your debts are paid off in full. And, because there’ll be no additional charges or interest added to your debt, increasing it while you’re working your way through your DPP, you’ll have a definite end date for the scheme and the end of your debt worries.
The DPP is also binding, so once your lenders agree to it, they will not be able to take any further action against you. However, this protection only remains in place if you keep up with your repayments.
Do you qualify for a DAS?
If you can’t afford to pay off your unsecured debts at their current monthly amounts, but think you could if they were lowered and you could pay over a longer period of time, a DAS might be right for you. You’d also need to currently live, or be based, in Scotland to qualify. Unsecured debts are things like credit cards, student loans, store cards, unsecured car loans and overdrafts.
What is included in a DAS?
All of your unsecured debt must be included in your DAS. Things that are not included in your DAS are secured debts, like your mortgage payments, secured loans, anything bought on HP and utility payments. However, if you have fallen into arrears with any of these, you can include those amounts in the DAS. But, before you decide to do this we’d advise you talk to your money advisor about it, as it may be better for you to deal with these arears yourself.
That's enough information for one day. Tomorrow we'll focus on how much a Das would actually cost you and the pros and cons of this debt solution.
by Shelley BowersBack to blog home