Debt Arrangement Scheme (DAS)

 November 2017

Fact sheet no. 22 SCOT Debt Arrangement Scheme (DAS)

Use this fact sheet to:

  • find out if you are able to use the Debt Arrangement Scheme;
  • find out how to apply for the Debt Arrangement Scheme;
  • use practical tips to help you to prepare details of your financial circumstances for your application;
  • understand how details of your debt payment programme will be recorded; and
  • understand how to make a complaint.

What is DAS?

The Debt Arrangement Scheme (DAS) is a legal scheme run by the Scottish Government. It will give you time to pay off your debts over a reasonable length of time through a debt payment programme.

  • Whilst a debt payment programme is in place through DAS, all interest, fees and charges on your debt will be frozen from the date that you apply.
  • Creditors should not contact you during your debt payment programme.
  • As long as you fully complete the debt payment programme and pay off your debts, the frozen interest, fees and charges will be written off.
  • DAS can also protect you from creditors making you bankrupt, or using court action against you to enforce your debts. Enforcing a debt through the courts is often known as ‘diligence’.

Even if some of your creditors have started to use court action against you, in most cases joining DAS will stop this action from going any further.

What are the advantages of DAS?

Information:

changes in law

The law governing DAS has changed several times since DAS debt payment programmes began to be approved.  If you are in a DAS debt payment programme that began some time ago, the rules affecting your programme may be different to the current ones. If you think that your rules are different, contact your approved money adviser and ask them to explain if you can benefit from the new rules.

  • You will get time to repay your debts over a reasonable period.
  • You will only have to make a single regular monthly payment. This is paid to an approved payment distributor who will send the money to your creditors for you.
  • The debt payment programme is normally free. See the later section Will I be charged a fee to join DAS? for more information.
  • Joining DAS will protect you from most creditors using court action to recover their debt.
  • DAS is flexible and, if your circumstances change, you may be able to vary your debt payment programme to make it more affordable, or even pay it off more quickly if your situation has improved.
  • If you have a sudden and short term drop in your income of 50% or more, you may be able to arrange a payment holiday of up to six months, until your circumstances improve.
  • Interest, fees and charges are frozen from the date you apply for a debt payment programme and are written off completely when it is completed.
  • If you have made payments for 12 years and have paid 70% of your debts, you may be able to end the debt payment programme early. This is called a composition.

Who is eligible to join DAS?

You can apply to join DAS either as an individual or as a couple, as long as:

  • you have one or more debts;
  • you live in Scotland;
  • you have a reasonable amount of money left over after you have taken account of your essential expenditure; and
  • you have had advice and assistance from an approved money adviser.

Applying to join DAS as a couple

If you want to apply as a couple for a joint debt payment plan, you must both agree to the debt payment programme proposal.

You will be treated as a couple if:

  • you are husband and wife;
  • you are living together as husband and wife;
  • you are civil partners; or
  • you are living together as if you are a husband and wife relationship, except that you are the same sex.

Who is not eligible to join DAS?

Extra advice:

conjoined arrestment order

Normally, you cannot have a debt payment programme when you have a conjoined arrestment order.  But you may still be able to have one in certain circumstances. If a creditor tries to take legal action to enforce a debt that is not included in the conjoined arrestment order, you may still be eligible for a debt payment programme. Contact us for advice.

You will not be able to join DAS if:

  • you do not have a reasonable amount of money available to pay into a debt payment programme;
  • you are in a protected trust deed;
  • you are bankrupt;
  • you are subject to a bankruptcy restrictions order or a bankruptcy restrictions undertaking; or
  • you are paying debts under a conjoined arrestment order (this is an order from the court combining two or more arrestment orders). The rules about conjoined arrestment orders are complicated. See the box to the right if this applies to you.

Special rule if you only have one debt

If you have a ‘time to pay direction’, a ‘time to pay order’ or a ‘time order’ for your single debt, this will stop you from being able to join DAS. Contact us for advice.

If your creditor started court action and the court agreed that you should have time to pay the debt, you will have a ‘time to pay direction’.

If a creditor had already taken you to court, got a decree and afterwards you asked the court for time to pay, you may have a ‘time to pay order’.

See our fact sheet:

Time orders.

A ‘time order’ is a way of asking the court to give you more time to pay a loan agreement if you have fallen behind with the payments. These are not very common in Scotland. If you think you may have one, contact us for advice.

How do I apply to join DAS?

If you think that a debt payment programme through DAS might be the best option to help you with your debts, you need to get help from an approved money adviser. Approved money advisers have been authorised by the Accountant in Bankruptcy (AiB) to apply for debt payment programmes through DAS.

The first thing that an approved money adviser will do is to look at all your circumstances and help you to decide on the best debt option for you.

There is a directory of approved money advisers on the DAS website www.dasscotland.gov.uk. You can also find a directory on the Scotland's Financial Health Service's website www.scotlandsfinancialhealthservice.gov.uk.

Will I be charged a fee to join DAS?

Warning:

money advisers

Companies may say that they can help with a DAS application, but they are not approved money advisers. For approved money advisers check either the DAS website www.dasscotland.gov.uk or Scotland's Financial Health Service's website www.scotlandsfinancialhealthservice.gov.uk.

Approved money advisers working for citizens advice bureaux, independent advice centres and local councils will not charge you for their advice, or for preparing your debt payment programme application.

Some companies in the private sector have also been authorised as approved money advisers and may charge you.  You can check if there is a fee on the approved money adviser register. See the earlier section How do I apply to join DAS? for information about how to do this. You would have to pay this fee because it cannot be included in the debt payment programme. Also, before you enter into any agreement with a fee charging money adviser, the company must follow detailed rules to ensure that they have told you that free money advice is available and from where you can get it. For more information about how to get free help, contact us for advice

See the later section What is a continuing money adviser? for more information about organisations that charge a fee for helping you to join DAS.

What happens next?

Once you have found an approved money adviser and decided that a DAS debt payment programme is your best option, your approved money adviser will take you through a series of steps.

These involve checking:

  • your income, to make sure you are claiming all the benefits and tax credits that you can;
  • your essential outgoings;
  • your surplus income (what is left to pay your creditors after your essential outgoings);
  • your priority debts;
  • how much you have left after paying your priority debts; and
  • how much your credit debts are.

Information:

Common Financial Tool

This is an official method to identify a person's income and spending. It also works out an amount to pay to debts.

In order to do this, your approved money adviser will:

  • list all of your debts;
  • check the amounts you owe to all your creditors; and
  • (from 1 April 2015) use a calculation based on the Common Financial Tool.

Your approved money adviser will also contact your creditors, if necessary, and prepare and submit your application for a debt payment programme.

What if my creditors are threatening enforcement action?

Important:

bank account

Once your details are on the DAS Register, your bank may suspend or restrict your bank account. You may need a basic bank account. You can pay money in and take it out, but doesn’t usually offer things like an overdraft or a cheque book.

It can take a little bit of time for your approved money adviser to get all the information that they need to be ready to apply for your debt payment programme.

In the meantime, your adviser can contact the AiB and confirm that you are intending to apply for a debt payment programme. This is called an ‘intimation’. Your intimation will then be placed on the DAS Register.

Once on the DAS Register, you will be protected against any creditor action for six weeks and this will give your adviser time to submit your proposal.  From 1 April 2014, a creditor who has an earnings arrestment which has already come into effect could carry on up to when the DAS is approved. If it comes into effect before the date, you tell the DAS Administrator that you intend to join DAS. Once the debt payment programme proposal has been approved, the earnings arrestment must stop.

See our fact sheet:

Basic bank accounts.

You cannot normally make another intimation within 12 months of the last one, although there are special rules for people in joint debt payment programmes through DAS.

What is the DAS Register?

Information:

DAS Register

You can search the DAS Register from a link on the home page of the DAS website www.dasscotland.gov.uk.

The DAS Register gives information about those who are applying for, or who have already got, a debt payment programme. This is a public access register which anyone can look at free of charge.

  • Creditors and credit reference agencies can check the DAS Register and may use this information to update your credit reference file to state that you have a debt payment programme.
  • The DAS Register will also say whether there has been any variation in the conditions of your debt payment programme.
  • It will include details of your name, age, address and the contact details for your approved money adviser.

What happens after my application is made?

Important:

attached goods

If the court officer has attached your goods and told you the date of the auction before:

  • you have intimated that you intend to apply for a DAS debt payment programme; or
  • you have applied for a DAS debt payment programme;

the goods can be removed and sold.

Once the DAS Administrator receives your application for a debt payment programme, your details are entered on the DAS Register, if they are not entered already because of an intimation. Once your details are entered you are protected against any creditor action to enforce their debt for six weeks. This protection will only stop if you withdraw your application, or if it is rejected by the DAS Administrator.

All creditors who are named on your debt payment programme proposal will be sent a copy. They will be asked if they agree to your proposal and, if they do not, they are asked to give reasons why not. If a creditor does not respond to this request within 21 days, the DAS Administrator will treat them as if they have agreed to your payment proposal and they will be bound by it.

If you want to withdraw your application for a DAS debt payment programme, you must tell the DAS Administrator in writing before they have either rejected or approved your application. You can do this yourself or you can ask your approved money adviser to do it for you.

What if a creditor objects?

If one or more of your creditors do not agree with the debt payment programme, they will tell the DAS Administrator.

Even if a creditor has objected, the DAS Administrator can still approve your debt payment programme by using the ‘Fair and Reasonable’ test. The DAS Administrator will decide whether to approve or to reject your application by taking into account a range of information for this test, including:

  • the total amount of your debt;
  • how long your proposed debt payment programme will take;
  • how you are proposing to pay and how often you are proposing to make payments;
  • how many other creditors have objected;
  • any comments that either you or your approved money adviser have made;
  • any previous debt payment proposals that you may have made; and
  • anything else that they think they should take into account.

What happens if my application is approved?

If your debt payment programme is approved, it is effective from midnight on the day before the date that the DAS Administrator confirms this on the DAS Register. For example, a debt payment programme approved on 1 February will be effective on midnight of 31 January. The DAS Administrator will inform both you and your approved money adviser. Once your proposal has been approved, you will be able to pay your debts through a single, regular payment as set out in your debt payment programme.

  • You will also have a ‘payments distributor’ allocated to you by the DAS Administrator. You will make your regular payment to this independent company.
  • Your payments distributor will contact your creditors and arrange to pay regular amounts to them for the period of time agreed in the debt payment programme.
  • Either your approved money adviser or the DAS Administrator will let your payments distributor know about your debt payment programme so that they can arrange the start of your payments.
  • Your first payment must be made within 42 days of the date of approval by the DAS Administrator.

Paying my debt payment programme directly from my wages

Your employer will usually not know that you have a debt payment programme. But, if you would prefer for your payment to be made directly from your wages, your approved money adviser or the DAS Administrator will contact your employer and send them a payment instruction. This will give them the details of your payment distributor and how much they have to take from your wages.

Your employer must then deduct this amount from your wages every pay day and send it to your payments distributor.

If a court had previously ordered that money should be taken out of your wages to repay a debt before you applied for a debt payment programme, your employer will be told to stop making these deductions immediately. This means you will only be making a single payment towards your debts, as set out in your debt payment programme.

Will I be charged a fee by the payments distributor?

Your payments distributor cannot charge you a fee for distributing your repayments amongst your creditors. However, the DAS regulations allow them to charge a small fee to your creditors for the service they are providing. This does not affect the payments that you are making.

What is a continuing money adviser?

Some approved money advisers will charge you a fee for providing advice and services. These fee charging approved money advisers are sometimes called ‘continuing money advisers’.

If you have agreed in writing to pay a fee to a continuing money adviser, the way that they manage your debt payment programme is different to the way that approved advisers who offer free advice will operate.

Both types of money adviser will complete the application form and send it to the DAS Administrator for approval in the same way.  However, once your proposal has been approved, the administration of the debt payment programme is different.

  • If you are using an approved money adviser from a free advice agency, the DAS Administrator becomes responsible for the administration of your debt payment programme.
  • If you are using a fee charging approved adviser, the administration of your debt payment programme will stay with the fee charging money adviser.

What can I do if my proposal is rejected?

If your proposal is rejected, the DAS Administrator will inform you in writing. Interest, fees and charges will be restored to your debts as if you had not made your application from the date of the DAS Administrator's decision. Creditors will be free to consider further action too. Contact your approved money adviser to talk about your options.

Review

If you think that the DAS Administrator has not applied the law correctly, you can ask them to review their decision. Your approved money adviser may be able to help you to do this. You have 14 days from the date of the rejection decision to write to the DAS Administrator to ask for a review. They will write back and confirm that your request has been received. The DAS Administrator may decide to:

  • keep the same decision as before;
  • alter the decision; or
  • remove (‘revoke’) the decision and replace it with a new one.

They will write to tell you the result of the review within 28 days.

Appeal to the sheriff court

If you think that the DAS Administrator has not applied the law correctly, either in their original decision or in the review, you can appeal to the sheriff court. Your approved money adviser may be able to help you to do this. You have 14 days from the date of the DAS Administrator's review decision to register your appeal at the sheriff court.

What happens if my circumstances change?

If you cannot keep to the payments on your debt payment programme because your circumstances change, you should apply to vary it before it is cancelled. If you can, apply to vary before you miss any payments. You have two options:

  • a payment holiday
  • a variation.

Discuss these with your approved money adviser to see which is best for you.

Applying for a payment holiday

If the money that you have available to pay into your debt payment programme suddenly goes down by half, or even more than that, you may be able to apply for up to a six month payment holiday to help you to sort things out. The DAS Administrator can agree to a payment holiday if:

  • you become unemployed;
  • your employment changes;
  • you go on maternity leave, paternity leave or adoption leave;
  • you take time off work to care for a dependant;
  • you become ill;
  • you go through a divorce, end a civil partnership, or go through a separation; or
  • you shared care (for financial responsibilities or something else) with a person who has died.

To apply for a payment holiday you should write a letter to the DAS Administrator, with a copy of your budget, explaining how your situation has changed. Alternatively, you could ask your approved money adviser to do this for you.

Since the payment holiday will temporarily stop your payments, you will have to carry them on for the same amount of time after the date they would otherwise have stopped. During the payment holiday, your protection from creditors continues. They should not send letters demanding payment.

You can apply for a payment holiday each time you meet the requirements. There is no limit to how many times you can apply. The DAS Administrator will take account of any previous payment holidays when they make their decision.

Applying for a variation

Information:

result of a variation

The result of a variation could be that the amount of your regular payment goes down or up. You might want to discuss this with your approved money adviser before you apply for a variation.

If your situation changes permanently, you might want to apply for a variation rather than a payment holiday, to make the payments more manageable in the future. To apply for a variation you should write a letter to the DAS Administrator, with a copy of your budget, explaining how your situation has changed. Alternatively, you could ask your approved money adviser to do this for you.

The DAS Administrator will usually only agree to a variation in one of the following situations.

  • All parties to the debt payment programme agree that it should be varied.
  • You have a significant change in your financial circumstances, such as your income going up or down.
  • Both you and your creditor agree that there is no longer a debt to be repaid.
  • When the debt payment programme was made a debt was missed out, or forgotten about.
  • A debt that you could not put a figure on when you applied for the debt payment programme has become a fixed amount that you now owe.
  • You need credit to pay for emergency repairs, funeral costs or something similar.
  • You have been given a payment holiday.
  • A creditor reduces your debt by offsetting some money that they owe to you against your debt.

When a creditor owes you money and they offset this against the debt that you owe them, it reduces the amount of your debt. If a creditor does this whilst you are in the debt payment programme, the DAS Administrator will try to get you and the creditor to agree to a variation. If the creditor will not agree, the DAS Administrator can propose the variation if they think it should happen.

If you need to vary your debt payment programme and your situation is different, you may still be able to get a variation. You should discuss your situation with your approved money adviser, because you may want them to help you to apply.

How will the DAS Administrator deal with my request?

The DAS Administrator will look at your request and take into account your views, the creditor’s and approved money adviser’s views, as well as any other relevant factors. They will either agree to a variation, or not, and write to all parties to inform them of their reasons for their decision.

If you do not accept the DAS Administrator's decision, because you think that they have not applied the law correctly, you can ask them to review their decision. See the earlier section Review.

If you think that the DAS Administrator has not applied the law correctly, either in their original decision or in the review, you can appeal to the sheriff court. See the earlier section Appeal to the sheriff court.

Debts that cannot be included in a DAS

From 11 December 2014, all debts must be included in your application for a debt payment programme through DAS.

Hire purchase or conditional sale arrears

If you have hire purchase or conditional sale arrears, only the arrears will be included within your debt payment programme. Your creditor will still be able to take court action to repossess the goods if you do not pay the ongoing payments.

Child support arrears

If you have child support arrears, your approved money adviser will talk to you about prioritising these payments. A debt payment programme cannot protect you from enforcement of these arrears. You will need to arrange to pay child support arrears as part of your essential spending.

Debt collected directly from benefit

Warning:

new benefit claims

If you start to claim benefits and are already in a debt payment programme that includes a debt which could be deducted directly from your benefit, you could find that the Department for Work and Pensions starts to make direct deductions for this debt. 

If you receive certain types of benefit, the Department for Work and Pensions can arrange to deduct some kinds of debts directly from your benefit before you receive it. For example, direct deductions from your benefit can be made for council tax arrears, fines, a short term advance, a budgeting loan, a budgeting advance and benefit overpayments.

However, debt payment programmes are usually not a good option for someone who is on a very low income such as a social security benefit. Speak to your approved money adviser about whether a debt payment programme is a realistic option if you start to claim social security benefits.

Student loans

From the 27 June 2015 student loans cannot be included in a debt payment programme. If you applied to have your debt payment programme approved before this date, any student loans that have been included will stay in your debt payment programme. 

What about mortgage or rent arrears?

Extra advice:

regular payments

It is important that you keep up your regular mortgage or rent payments whilst you are in a debt payment programme. If you start to fall behind with these payments once you are in a debt payment programme, speak to your approved money adviser.

If you have mortgage or rent arrears, you can still apply for a debt payment programme, but you must include your arrears in the debt payment programme. This will not always stop your mortgage lender or landlord from taking repossession action if you are behind with your payments.

Having your mortgage or rent arrears included in a DAS may make repossession less likely, but you will need to keep making your regular mortgage or rent payments.

If you have mortgage or rent arrears included in a DAS debt payment programme, but your lender still starts possession action, the court or tribunal may take this into account when deciding the case. Also, one of the factors the court or tribunal must consider, when deciding if it is reasonable in all the circumstances to allow eviction to go ahead, is whether you are in a debt payment programme.

If I miss payments on my debt payment programme

If you miss payments, or make part payments, so that your arrears add up to the value of two months’ payments and another one is due, the DAS Administrator may revoke your debt payment programme. They can also revoke it if:

  • you make yourself bankrupt;
  • you obtain a protected trust deed;
  • you do not keep to a condition which is part of your debt payment programme;
  • you have not told the truth when applying for your debt payment programme or when making an application for a variation;
  • a creditor petitions for you to be made bankrupt before the debt payment programme is approved and the court makes you bankrupt;
  • you are in a joint debt payment programme and have separated from your partner; or
  • you die, or one of you in a joint debt payment programme dies.

Extra advice:

couples separating

If a joint debt payment programme is revoked on the grounds of separation, creditors cannot immediately take action to enforce court orders (use ‘diligence’). They must continue to freeze all interest and charges for a period of six weeks after a joint debt payment programme has been revoked.

The DAS Administrator will contact you and the other parties to the debt payment programme to tell you that they intend to revoke it, giving you at least four weeks to respond. If you do not respond and the debt payment programme is revoked, your creditors cannot take action against you for 14 days from the date of the decision to revoke.

You must act quickly if you want to stop your debt payment programme from being revoked. Let the DAS Administrator know about your circumstances and why you want to keep your debt payment programme. You may want your approved money adviser to help you do this.

When deciding whether or not to revoke the debt payment programme, the DAS Administrator will take into account the rules and also the circumstances around how you have broken them. They will look at any other factors, including whether or not your debt payment programme is likely to be successful.

If your debt payment programme is revoked, your creditors will be able to take action against you again. Also, your creditors can ask you to pay the interest and charges that would have been payable if you had not started the debt payment programme.

Can I take out further credit?

Information:

loans and advances from the DWP

A short term advance, a budgeting loan or a budgeting advance from the Department for Work and Pensions is not treated as credit by DAS and you can apply as normal if you are on certain benefits.

You are not supposed to take out further credit whilst you are in a debt payment programme, unless one of the following special circumstances applies to you.

  • The DAS Administrator approves your credit and your debt payment programme is varied to help you to repay the extra credit.
  • You need credit for emergency repairs to your home.
  • You need credit because you are responsible for reasonable funeral expenses.
  • Your credit was taken out before you joined DAS and was part of a cyclical loan agreement.
  • You incur a trade debt in the ordinary course of business.

You must tell the creditor if you are in a debt payment programme and you get credit due to one of these circumstances. You will be expected to pay this at the agreed contracted rate. Your debt payment programme may be varied to take this into account.

Will DAS affect my credit rating?

Credit reference agencies check the DAS register regularly and may update your credit file to reflect that information. This is likely to affect your ability to take out further credit.

Can I end my payments early?

The DAS Administrator, or a fee charging money adviser, can ask creditors to accept less than the full amount of the money that you owed them when you started the debt payment programme. This is called offering a ‘composition’. If all your creditors accept this, it will end your debt payment plan and you will have no more to pay. This option is available to sole traders, but it is not available in a business DAS debt payment programme.

An offer of composition can only take place after:

  • you have paid 70% of the amount that you owed when the debt payment programme started; and
  • you have made payments for a full 12 years (not including any payment breaks).

The DAS Administrator will record which creditors agree to the offer of composition. If a creditor does not respond to the offer within 21 days, they will be added to those creditors who agree to the composition. If all creditors (including those creditors who do not respond) accept the offer of composition, the DAS Administrator will write to you to confirm that your debt payment plan has ended. They will tell your creditors. The DAS Administrator will also tell your employer to stop taking money from your wages to pay the debt payment programme, if it has been happening.

But, if all of your creditors do not agree to the offer, the DAS Administrator can still arrange a composition and alter your debt payment plan. They will take account of the agreements received and make a variation. The DAS Administrator will write to you to explain the details of the new variation.

What happens when I finish my debt payment programme?

You have finished your debt payment programme when:

  • all your creditors have agreed to an offer of composition; or
  • you have paid all the payments; or
  • you make a lump sum payment equal to all outstanding payments; or
  • all creditors in your debt payment programme agree in writing to complete it before the scheduled end.

Once this has happened, you cannot be held liable for any further payments towards the debts included in the debt payment programme, or any further penalties, interest or charges. The DAS Administrator will remove your details from the DAS Register and tell your creditors that your debt has been repaid.

If you are repaying your debt payment programme directly from your wages, the DAS Administrator or your approved money adviser will write to your employer, telling them to stop the deductions from your wages.

What if I have a complaint?

If you are unhappy with the way in which your debt payment programme has been dealt with, you may have reasons for complaint about your approved money adviser or the DAS Administrator.

A complaint about your approved money adviser

If you feel that you have a complaint about your approved money adviser, you should make a complaint to the organisation that they work for.

You can also make a complaint about your approved money adviser to the DAS Administrator. They have the power to cancel approved money adviser status if they feel that the adviser is unable to carry out the duties set out by the Scottish Government. See the Useful contacts section for details of how to contact the DAS Administrator.

A complaint about the DAS Administrator

If you feel that you have a complaint about the DAS Administrator, you should follow the Accountant in Bankruptcy’s complaints procedure.

If you are still unhappy, you can complain to the Scottish Public Services Ombudsman. See the Useful contacts section for details of how to contact the Accountant in Bankruptcy and the Scottish Public Services Ombudsman.

Useful contacts

Citizens Advice Scotland
Offering independent and confidential advice on issues such as debt, money problems and welfare benefits.
Phone: 0808 800 9060
www.cas.org.uk

DAS Administrator
Responsible for managing the Debt Arrangement Scheme.
Phone: 0300 200 2770
www.dasscotland.gov.uk

Money Advice Scotland
You can find a local money adviser through a link on the website.
Phone: 0141 572 0237
Email: info@moneyadvicescotland.org.uk
www.moneyadvicescotland.org.uk

Scottish Public Services Ombudsman
For complaints about the Scottish Parliament, local government, the health service and your water provider.
Phone: 0800 377 7330
www.spso.org.uk

The Ombudsman has a freepost address.

Scottish Public Services Ombudsman
Freepost EH641
Edinburgh
EH3 0BR