Debt Arrangement Scheme

This is a debt relief solution available only in Scotland. It allows you to apply for a debt repayment program (DPP) that helps pay off debts by making affordable monthly payments. This is a legal solution that can only be carried out by an approved organisation, such as StepChange Debt Charity. The duration of the DPP depends on the amount of your debt and the so-called financial surplus each month to pay off the debt. DPP can only be carried out if you are able to pay back what you owe within a reasonable time, which is usually less than ten years. The repayment plan ends when you make all payments and the debts are settled, or if you pay off the debt with a lump sum.

Criteria for a DAS

  • Have a minimum of one creditor
  • Have a minor disposable income 
  • Not be subject to another debt solution 

Advantages

  • All interest and charges will be frozen
  • Creditors cannot continue to contact you or continue to collect debts
  • If your financial situation changes, you can apply for a change in the payment amount or a six-month break in payments
  • At the end of the DPP, all your debts will be redeemed
  • You will not have to sell any belongings and property 
  • No employment-related issue 

Disadvantages

  • 10% of your monthly instalment is treated as the fixed costs of running the program. For example, if you are paying a creditor £100 your debt will be reduced by £100, however the creditor will actually receive £90 and the other £10 will cover the fees. 2% is paid to the Accountant in Bankruptcy (AiB) and 8% is kept by your payment distributor
  • You may have to sell your car or convert to a cheaper model
  • After going through DPP, your data will be placed in the public register. It is an online register that anyone can access
  • If you do not pay for your payments, the DPP may be broken and creditors may charge interest or take further action against you

Which debts can be included within a DPP?
You can include non-priority debts:

  • Bank loans 
  • Store cards and catalogues 
  • Overdrafts 
  • Credit cards 
  • Student loans 
  • Water charges 
  • Benefit overpayments 
     

Which debts cannot be included within a DPP?
You cannot include priority debts: 

  • Mortgage or rent arrears
  • Gas and electricity arrears 
  • Council Tax or rates arrears 
  • Magistrates’ court fines 
  • Arrears of maintenance payable to an ex-partner or children 
  • Income tax or VAT arrears 
  • TV licence or TV licence arrears 
  • Secured debt

Considerations

  • A DPP could last up to ten years (unsuitable if longer) 
  • You can take a ‘payment break’ if you have a sudden drop in income, perhaps after losing a job. This payment break can last up to six months.

DPP Procedure

  • A debt payment programme (DPP) is set up by a DAS approved money adviser, such as StepChange. 
  • Upon establishing your circumstances (of which must be suitable to the DAS), your DAS adviser will make the proposal, detailing the total amount owed, the agreed payment instalments, the frequency for proposed payments and the proposed length of the DPP.
  • Creditors will be afforded a period of 21 days to respond to the DPP proposal. If creditors do not respond, they are deemed to have accepted the proposal.
  • If creditors all agree or are deemed to have agreed (because they do not respond) the DPP under DAS is agreed automatically. Creditors will then be bound by this DPP, as long as the debtor sticks to the agreement.
  • Once approved, payments will be made by a payment distributor by any of the following: 
  • Payment mandate to your employer
  • Direct debit or standing order 
  • Smart card, swipe card, smart key 
  • Any other method agreed 

 

Close Menu