A debt arrangement scheme is a government-backed debt management scheme for residents of Scotland to repay their debts at an affordable rate. It allows you to repay your creditors over an extended period of time than was originally agreed, and during this time your creditors must freeze interest and charges, seeing them written off if complete the scheme.
To eligible for a debt arrangement scheme you must be a resident of Scotland, be put forward by a debt arrangement scheme approved adviser, have more than one debt, and have a reasonable level of disposable income.
If both you and your partner have debts, you may apply for a joint debt arrangement scheme, as long as you both agree to the terms.
What Happens In A Debt Arrangement Scheme?
A debt arrangement scheme allows you to repay your debts over a ‘reasonable’ length of time. For this to happen an adviser will discuss with you your level of disposable income, and then a proposal will be sent to all of your creditors for consideration. They are given 21 days to either accept or reject the debt arrangement scheme proposal, if they fail to reply in the given timeframe, they are considered to agree with the scheme.
Even if the creditors reject the proposal, it can still go ahead if the DAS Administrator considers it a ‘fair and reasonable’ proposal. Once it has been approved, your creditors must comply with the legal legislation.
If your situation changes, your debt arrangement scheme may be altered to take your new situation into account.
If you don’t comply with all of the conditions agreed, the debt arrangement scheme may be revoked and your creditors can add all of the interest and charges that would have accrued during the period that the DAS was running, they can now also take legal action against you if necessary.
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What Happens After A Debt Arrangement Scheme?
Once you have completed the agreed payments to your creditors, or they all agree that in writing to end the scheme early, you are officially free from these debts.
You can no longer be held accountable for the debts included in the debt arrangement scheme, and you cannot be charged the interest and credit that was frozen for the duration of the scheme.