How does the Debt Arrangement Scheme work?

The beauty of Debt Arrangement Scheme is that it is a very simple, flexible debt payment scheme that can help you make real inroads into paying off your debt. Even setting up the DPP is very simple.

Step 1 - Find a money adviser

Because Debt Arrangement Scheme is a financial product that needs to be understood by those who undertake it, Debt Arrangement Scheme applications can only be made by specially-trained money advisers. They have the in-depth financial knowledge to evaluate your financial circumstances and ensure your application is set up correctly. You can find a list of approved money advisers to choose from at www.moneyscotland.gov.uk.

Step 2 – Do a budget

The most important part of the Debt Arrangement Scheme set up is a budget, which your money adviser can help you do if you have never compiled one before. Your budget has to show income vs expenses so the adviser can see how much surplus you have at the end of every month. At the moment that might sound impossible if you have nothing left at the end of every month, but you should not include debt repayments at this stage. This should leave you with a surplus of money, which will be earmarked for creditors. If you do not, then it is unlikely your application will go any further and your money adviser may have to give you advice on other debt solutions that are right for your circumstances.

Step 3 – Creating a Debt Payment Plan (DPP)

Your money adviser will use your budget to design a DPP that distributes your surplus income equally among your creditors. They will also set up an emergency fund with some of the surplus if possible to help you avoid having to take out credit if you have an emergency. Once the DPP is ready, they will then contact them to get their agreement and your creditors have 21 days to respond. If there is no response, it is assumed they agree with the DPP, but even if they don’t there is no basis for an objection if the DPP is fair and reasonable.

Step 4 – The DPP is approved

If no objection is lodged within 21 days that would question the fairness of your DPP it will be sent to the Debt Arrangement Scheme administrator for approval. Once approved, all interest fees and charges on your debt will be frozen.

Step 5 – Begin your payment plan

Once approved by the Debt Arrangement Scheme administrator your DPP will be entered onto the DAS register. A regular monthly payment arrangement is then set up to send your creditors an equal share of your surplus income, however an approved payments distributor handles this so you need never have contact with your creditors. And if they try and contact you, you simply ask your money adviser to deal with them.

Step 6 – The final and best step

Your DPP comes to an end. Your last payment is made to the last creditor, your payment distributor and money adviser give you the official sign off and suddenly all of your income is yours. You may have been paying your DPP for many years and have owed tens of thousands of pounds. Now you are debt free and for the first time in recent memory your future is looking happier and brighter.

Go out and celebrate! For more information about applying for Debt Arrangement Scheme, call us on 0800 043 2027 and speak to in confidence to one of our DAS consultants who will talk you through your options and point you in the right direction. Alternatively use our free call back service here.