There a number of advantages and disadvantages to a Debt Arrangement Scheme (DAS). However their relevance will very much depend on your individual circumstances. We consider the advantages first.
1. Single affordable monthly payment
If you are struggling with a number of unsecured debts, one of the problems is that you are trying to juggle multiple payments that you cannot really afford. A DAS allows you to make one affordable payment to your creditors each month helping you to get back in control of your finances.
2. Legal protection from creditors
Once your DAS has been agreed, your creditors are no longer allowed to take any action against you to collect their debts. They will stop writing to you and calling you. In addition you are legally protected from creditors trying to get county court judgements, charging orders or wage arrestment against you.
3. Interest and charges frozen
Your creditors are no longer allowed to add interest and charges to your accounts once your DAS has started.
4. No obligation to release equity from your home
If you are a homeowner then after starting a DAS you will not be asked to release equity from your property to help repay your debt. However you can do so if you wish which could help reduce the period over which the DAS must be paid
Once you have started a DAS you can increase the payments at any time to help reduce the balances faster. It may also be possible to settle your debt in full if you gain access to a lump sum. It is possible to reduce the payments that you make if your circumstances take a turn for the worse however you need to apply to do this. You cannot simply reduce the payments you make.
It is important to understand that as well as benefits, starting a Debt Arrangement Scheme can also have some disadvantages. Before making a decision to start a DAS you need to understand these in the context of your circumstances.
1. Publicly listed
If you start a DAS, although the agreement is not specifically publicised in a local newspaper, your name and address and the fact that you have started the DAS will be listed in the DAS Register. This document is freely accessible via the internet. As such anyone can find out that you are in an DAS if they want to make a search.
2. No debt written off
Unlike the other formal personal debt solutions available in Scotland, there is no provision for debt to be written off if you use the DAS. You still commit to repay 100% of your outstanding balance and any interest and charges that have been added to your accounts at the time the DAS begins.
3. Extended repayment time
Because the DAS allows you to reduce the amount you pay to your creditors each month this will significantly extend the time period over which it take you to pay all of your debt and become debt free.
4. Negative effect on credit rating
If you start a DAS, your credit rating will become significantly worse. For more information see How a DAS affects your credit rating.
More information about the Debt Arrangement Scheme solution is available in the left hand column. However only a brief overview is given here. For more details and advice please see one of our dedicated information websites:
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