FAQs

Debt Payment Plans – Questions & Answers

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).
DAS:

  • allows you to pay off your debt(s) over an extended period of time;
  • will take into account what you can reasonably pay back at regular intervals based on your disposable income;
  • 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;
  • allows you to make one regular payment towards clearing your debt meaning you don’t have to deal with your creditor(s);
    provides protection from creditors taking enforcement action to recover money owed to them;
  • freezes interest, fees and charges on your debt, from the date the application for a DPP is submitted to creditors for approval, and these are waived on completion of the DPP.

Who is involved?

Debtor: An individual who has personal debt(s) and has agreed to a Debt Payment Programme (DPP).

DAS Approved Money Adviser (a money adviser): An individual who meets the criteria to offer a DPP under DAS as a debt management option. A money adviser may charge for their services.

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.

Continuing Money Adviser: a DAS Approved Money Adviser who can administer a DPP under DAS. A continuing money adviser may charge for their services.

Payments Distributor: an organisation responsible for the collection of DPP payment instalments from debtors and the distribution of these funds to creditors.

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;
  • you have a reasonable level of surplus income after meeting your basic needs, for example (mortgage, rent, utilities, food, council tax).

You cannot participate in DAS if you:

  • have granted a Protected Trust Deed from which you have not been discharged; or
  • are bankrupt and your trustee has not been discharged, or
  • are 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 cannot participate in DAS if you are paying a debt(s) under a conjoined arrestment order.

However, if you have a conjoined arrestment order and any creditor has tried lawfully to enforce another debt(s) that you owe, then you may be eligible for a DPP.

Couples who are both liable for a debt which may be included can apply for a joint DPP if their relationship falls within the following criteria:

  • spouses or civil partners of each other; or
  • living together as if spouses of each other.

For a joint DPP to proceed, both applicants must consent to the 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 leaflet for more details which is available on the Accountant in Bankruptcy (AiB) website www.aib.gov/uk/debt-arrangement-scheme.)

If you are not certain whether you are eligible to apply speak to a money adviser for advice.

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.

Some organisations may also give information and advice over the telephone or online.

If the organisation charge for the provision of money advice they must disclose the amount of fees that will be charged and advise where you can obtain free advice.

You can find contact information at the back of this booklet or find a money adviser near you on the AiB website at: www.aib.gov/uk/debt-arrangement-scheme.

Fees will also be applied for the administration of your DPP.

If you have a continuing money adviser they may charge for their services and you should check the details and costs with your chosen money adviser prior to entering into any agreement for these services. You will be responsible for making these payments and the cost should be included in your expenditure.

The DAS Administrator will be paid an administration fee of 2% of the total debt due to creditors. The Payment Distributor will be paid an administration fee of no more than 8% of the total debt due to creditors. You will not be responsible for making these payments. This money is deducted from the payments you make before the distribution is made to your creditors.

Will it affect my credit rating?

If you participate in DAS 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.

The DAS Register can be found on the AiB website at www.aib.gov.uk.

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 and ask you to provide proof of your financial circumstances.

They will calculate your surplus income using a standardised system called the Common Financial Tool and discuss how much of the surplus you wish to use to repay your creditors.

If your only source of income is benefits, you may be able to apply for DAS, but must have available surplus income to make payments.

All debts owed can be included in your application. The exception to this is a continuing liability (eg council tax, utilities, student loans, a standard security). You can also choose to exclude rent or mortgage arrears for your home. If you do the payment of these debts must be clearly shown in your expenditure.

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 proposal will be sent to all of the creditors that you include.

Am I protected during the application period?

Depending on your individual circumstances, your money adviser may recommend you tell AiB that you intend to apply for a DPP.

This is done by completing a moratorium application form which can be found on the AiB website or online through the Register of Insolvencies at www.aib.gov.uk.

If the moratorium application is accepted the information will be shown in the Register of Insolvencies and the DAS Register. It will protect you from action to enforce payment of any debt(s) for a period of up to six weeks immediately prior to the submission of your DPP application.

You are only allowed to submit one moratorium application in any twelve month period, unless you have been in a joint DPP which has been revoked. In this case you may re-apply for a moratorium if you intend to make an application for a sole DPP. Once your application is submitted, you will remain protected.

This protection will be removed should you decide to withdraw your application, or if your application is rejected by the DAS Administrator.

What information is in a DPP?

Your DPP proposal will provide:

  • a copy of your income and expenditure;
  • the total amount you owe the creditor;
  • the net amount your creditor will receive;
  • the agreed amount for each repayment instalment;
  • the proposed length of your DPP;
  • the frequency of the proposed payments.

Each creditor is given a period of 21 days to respond to the proposal and accept or reject the terms. 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.

If the creditors included in your DPP do not consent to your proposal, the DAS Administrator can still approve the DPP if it is found to be fair and reasonable to do so.

What is the Fair and Reasonable test?

The Fair and Reasonable test is the criteria that the DAS Administrator will use when deciding whether to approve or reject a DPP application if the creditors do not consent.

The DAS Administrator must take into account:

  • the calculation of the surplus income using the Common Financial Tool together with any statements or evidence provided by the money adviser;
  • 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

What happens if my DPP is approved?

You will be subject to a number of standard conditions. These include:

  • making the first payment within 42 days of the DPP being approved;
  • make all payments as they fall due;
  • pay a continuing liability (eg council tax)

A full list of the standard conditions can be found on the AiB website at www.aib.gov.uk/debt-arrangement-scheme.

You may also be subject to discretionary conditions which are put forward on your behalf by your money adviser or imposed by the DAS Administrator to allow your programme to be approved. These could include money to paid from the sale of an asset, a guarantee of extra payments from a future lump sum, or any other reasonable condition.

While you have a DPP under DAS you will only be able to incur debt, either alone or jointly, up to an amount of £2,000 unless you obtain the approval of the DAS Administrator.

You can only get additional credit over and above the £2,000 mentioned above in the following circumstances:

  • credit approved which is included in a variation to a
    DPP; credit for emergency repairs to the debtor’s
    home; credit for reasonable funeral expenses;
  • further credit incurred as part of a cyclical loan
    agreement in operation prior to the approval of the
    DPP; or
  • trade debt incurred by the debtor in the ordinary course of business.

Your continuing 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 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;
  • another method of payment which has been agreed with the DAS Administrator.

Creditors in your DPP will be bound by the terms provided that you continue to adhere to the agreement.

What happens if my DPP is rejected?

If your proposal is rejected, you should contact your money adviser to discuss your options. This may include submitting a revised proposal.

You will also be able to ask for a review of the decision.

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.

Variation can result in one or more of a number of changes:

  • the amount you pay might be increased; the amount you pay might be reduced;
  • the length of the DPP might be reduced; the length of
    the DPP might be increased; or
  • a new condition might be attached to the DPP.

You may wish to discuss this with your money adviser before you decide to proceed.

The DAS Administrator will only agree to a variation in the following circumstances:

  • where all parties agree that the programme should be varied; or
  • where there has been a material change of
    circumstances which may include an increase or
    decrease in the debtor’s income (calculating using the Common Financial Tool); or
  • where the debtor and creditor agree that there is no longer a debt to be repaid; or
  • where a liability of a debtor is discharged by a creditor applying compensation; or
  • where a debt due at the date of the agreed DPP was omitted or overlooked; or
  • where a future debt, not quantifiable at the date the
    DPP was agreed, becomes due; or
  • the debtor requires additional credit to pay for,
    emergency repairs, funeral costs etc and they have
    already incurred debt of £2000; or
  • where the debtor wishes a payment break for a period up to 6 months and meets the criteria.

If you are in a joint DPP an application must be made by both debtors.

Application for a variation.

You or your money adviser may apply, in writing, to the DAS Administrator for a variation to the DPP. Your creditors will be advised that the application has been made.

A creditor can also apply for a variation but they must make a reasonable attempt to agree the change with you first.

On receipt of the application the DAS Administrator or continuing money adviser will notify all parties included in the DPP.

The DAS Administrator must approve a variation in certain circumstances.

Where the DAS Administrator must decide if a variation is fair and reasonable they will consider the request, taking into account the views of the debtor, creditors, money advisers or any other relevant factors and make a decision to approve or reject the variation.

What is a payment break?

DPPs sometimes become unmanageable due to a short–term income shock where you, or someone in your household, experiences a reduction in disposable income.

In these circumstances, you can apply for a payment break of up to six months where the disposable income has reduced by 50% or more (calculated using the Common Financial Tool)

This must be a result of the following:

  • 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;
  • a reduction in social security benefits or tax credits (or both);
  • 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).

If the payment break variation is approved the length of the DPP will be adjusted accordingly.

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.

What happens if my variation is approved?

You will be still be subject to the standard conditions.

You may also be subject to discretionary conditions
which are put forward by you or imposed by the DAS
Administrator to allow your variation be approved.

Your continuing money adviser or the DAS Administrator will advise your Payment Distributor you will contact you to arrange any change to your payments.

Creditors in your DPP will be bound by the terms of the variation provided that you continue to adhere to the revised agreement.

What happens if my variation is rejected?

Your DPP will continue as if the variation application had not been made.

You will be able to ask for a review of the decision. See section 5 for further information.

Completion of a DPP

A DPP reaches its conclusion when:

  • you have made all payments as agreed in the DPP; or
  • you make a lump sum payment equivalent to all
    outstanding payments due; or
  • all creditors in the programme agree in writing to
    complete the DPP prior to the scheduled end; or
  • an offer of composition has been accepted by creditors.

What happens when I have made all my payments?

Once your DPP has been completed your details are removed from the DAS Register and your creditors will be informed that your debt(s) have been repaid.

If you are making your payments directly from your wages, your continuing money adviser or the DAS Administrator will write to your employer to cease the deduction from your wages.

All interest, fees and charges on your debt, from the date the application for a DPP was submitted to creditors for approval, are waived on completion of the DPP.

Your creditors will no longer be able to pursue you for this money.

What is an offer of composition?

The DAS Administrator or continuing money adviser, with the consent of the debtor, may make an offer of
composition if:

  • after a period of twelve years has passed; and
  • where 70% of the total amount of debt has been paid.

What happens if the offer is fully accepted?

You will be notified in writing by the DAS Administrator.

Your liability for any further payments towards debt(s) included in the DPP, as well as any interest or charges which would have accrued after the date of application is discharged.

What happens if the offer is not fully accepted?

The DAS Administrator must vary the DPP in accordance with the acceptances (or deemed acceptances).

You will be notified in writing of the effect of the variation.

Is there any other way a DPP can come to an end?

The DAS Administrator can consider revoking a DPP if certain conditions arise or an application is made.

Why would a DPP be revoked?

The DAS Administrator will automatically revoke a DPP if you apply and are awarded bankruptcy, or if you sign a trust deed which becomes protected. Your details will be removed from the DAS Register and placed on the Register of Insolvencies.

There are a number of grounds where you, your money adviser acting on behalf of the debtor or a creditor in the DPP can apply to revoke a DPP. The DAS Administrator can initiate the action without an application.

These grounds include where:

  • you failed to satisfy the conditions of the DPP; or
  • you missed the equivalent of payments due over a 2 monthly period and a further payment is due; or
  • you made an untrue statement when applying for DAS or variations to their DPP; or
  • the parties involved in a joint DPP have separated.

The DAS Administrator will notify all parties if they intend to revoke the DPP, giving them a period of at least four weeks in which to provide any comments before making the decision.

The DAS Administrator will consider the following factors when considering whether to revoke the DPP:

  • the nature of the failure or untrue statement;
  • whether the application complies with the grounds
    listed above;
  • any factors that indicate whether or not the programme will be successful;
  • any other factors for consideration.

What can I do if my DPP is revoked?

If your DPP is revoked, you will be liable for any outstanding amount owed, including 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 will be able to ask for a review of the decision.

Debtor Review

You may apply 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.

Creditor Review

A creditor may apply 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 DPP;

dispense with creditors consent; and approve or refuse a variation.

Review Process

All reviews must be made in writing within 14 days of the date of the original decision and are carried out by the DAS Administrator’s independent Review Team.

A review request should be sent to the AiB, Operational Policy and Compliance Team, or by email to: [email protected]

A decision must be issued within 28 days and may:

  • confirm a decision; amend or alter a decision;
  • revoke a determination and substitute a new determination.

Appeal

If you or a debtor do not agree with the decision of the Review Team an appeal can be made to a sheriff on a point of law. An appeal must be made within 14 days of the date of the review decision. The decision made by the sheriff is final.

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