Debt Arrangement Scheme: the flexible alternative to Trust Deeds

One of the hardest decisions when you’re in debt is deciding the best way to get out of it. It isn’t always a simple case of saying “well I’ll just pay it back.” Sometimes circumstances conspire to stop you or slow you down past the point where your creditors are happy to wait any longer and want take you to court or push for your sequestration. If you think you can pay back what you owe in full if only you had a little more time, the Debt Arrangement Scheme (DAS) is the option that will let you do that.

Debt Arrangement Scheme Example

Here is an example of how a Debt Arrangement Scheme could make your debts affordable.

Example Unsecured Debts

1 Council tax £2,000
2 Credit card £3,420
3 Pay day loan 1 £600
4 Pay day loan 2 £345
4 Secured loan arrears £2,500
Total Owed £8,865

Your Monthly Repayments Would Be

(total contractual repayments)
(total contractual repayments)
Reduced by

* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here

What is a Debt Arrangment Scheme?

A Debt Arrangement Scheme is a debt management tool for you if you have two or more debts and know you could pay them back in full. Perhaps you’ve been in ill-health for a while or have been made redundant from a well-paid job, but you are confident that you can turn things around.

With the help of a trained money advisor, you set up a debt payment plan (DPP) based on your current financial circumstances which they approach your creditors to gain approval for. The difference between this debt repayment option and others is that the total amount of money you have available for creditors is split fairly between them. No-one gets more than anyone else, but usually the offer made to your creditor is less than what you are contracted to pay them.

Your creditors then have just 21 days to respond to your offer. If you hear nothing from them, it is assumed they are happy to go ahead with your new payment option. If some of your creditors disagree, it doesn’t necessarily mean your DDP won’t be approved. If the payment plan is fair and reasonable then your money advisor will go ahead and apply to the Debt Arrangement Scheme administrator for approval. Once approved, every month you make one single payment to a payment distributor, who takes over and ensures that each payment is made on time to each creditor. Your creditors cannot arrest your earnings and cannot make you bankrupt.

The only time that a creditor’s objection will be upheld is if it is clear that you simply cannot pay and really should be sequestered or if you have a lot of land or property assets that should be liquidated to pay creditors.

What happens if your circumstances change?

A Debt Arrangement Scheme has been set up to be a very flexible tool. Should your circumstances change for the worse or the better, your money advisor can make the necessary arrangements to decrease or increase your payments.

What happens if you have mortgage arrears?

Mortgage arrears are covered by the Debt Arrangement Scheme, but you must still be able to meet your regular mortgage payments. You cannot include your normal monthly mortgage payment in your DPP. 

It is still possible for your creditor to take you to court and try to force a repossession however, if you apply for a section 2 order you can delay the process. This will give you more time to pay off the arrears and the courts will take into accounts your efforts to pay them back through your DPP. The court is not allowed to grant a payment order on the arrears as they are already been paying through the Debt Arrangement Scheme.

Can your family and friends find out about you being on the Debt Arrangement Scheme?

Even if you don’t tell them, it is theoretically possible for people you know to find out that you have a DPP. Each DPP is entered into a publicly available Debt Arrangement Scheme register, however it isn’t the sort of database you just stumble across – your friends or family would have to know to go there and specifically look for your name. If you haven’t told them anything about the Debt Arrangement Scheme and your DPP, it is very remote they would take it upon themselves to find the database and look through for your name.

Lenders also have access to the register, so in the future if you apply for loans or credit cards you may find your DPP affects your credit rating.
The Debt Arrangement Scheme is one of the most flexible debt-repayment tools available, but like all debt solutions you need to take unbiased and professional advice before embarking on it as it. Give the advisors at Scottish Trust Deed a call on 0800 193 1024 and they will talk you through your options and whether Debt Arrangement Scheme is suitable for your individual circumstances.