Free debt management plan

Key facts

See our fact sheet:

Debt Arrangement Scheme (DAS).

In Scotland, a debt payment programme under the Debt Arrangement Scheme (DAS) is usually a much better option than a free debt management plan because, for example, interest and charges automatically stop. You include priority and non-priority creditors and you are protected from creditors taking enforcement action.

How much debt must I owe? No minimum or maximum level of debt. You will need to be able to pay at least £5 each month to each debt.

What type of debt? Use this option for credit debts only.

How long will it last? ​You will usually have to be able to repay your debts in less than 10 years.

How it works

See our fact sheet:

Debt management plans (DMPs).

You need to have at least £5 each month to pay each of your non-priority debts after you have paid your essential outgoings and any priority debts. You usually have to be able to repay your debts in less than 10 years.

You make the agreed monthly payment to a debt management company which distributes the payments among your creditors for you.

Make sure you use a debt management company that does not charge you any fees for their services. Contact us for advice.

Advantages

  • This is a fair and transparent method of distributing payments.
  • The debt management company will help you work out how much you can afford to pay using the Standard Financial Statement.
  • The debt management company will negotiate with creditors on your behalf. This means that offers are more likely to be accepted and interest frozen.
  • You can increase your payments if your circumstances improve.
  • You may be able to reduce your payments if your circumstances get worse.
  • The debt management company administers all payments to your creditors. You just make one monthly payment to the debt management company. They should pass your payments on within five working days.
  • The debt management company should review your plan with you every year and give your creditors regular updates.

Disadvantages

  • You will have to pay your debts back in full. This could take a long time.
  • The debt management company cannot force creditors to accept offers, or freeze interest, so a DMP cannot guarantee that all creditors will take part.
  • Creditors may still take court action against you.
  • Your ability to get further credit will be affected.
  • It is very important to make sure you use a free debt management company. It is not always easy to tell if the service is free when you look at their website. Contact us for advice.