How might the Debt Arrangement Scheme help me deal with my debts?
A DPP under the Debt Arrangement Scheme is an agreement you enter into with your creditors that aims to fully pay off your debts, at a rate you can afford. A debt payment programme under DAS is a formal, legal contract. This means both you and your creditors are bound to it and protected by it.
How it works:
- You make a single monthly payment, based on what you can afford, which is shared across your creditors
- Your creditors will no longer contact you to ask you for repayments
- All interest and charges on your debts will be frozen and written off when you complete your DPP
- Assets such as your home or car are protected under DAS, as long as you are keeping up repayments on them
- Your creditors can’t take you to court, start any new diligence action, or petition for your bankruptcy for any debts included your DPP
- Your name will be recorded in the public DAS Register when you participate in the DAS
- The Accountant in Bankruptcy make the final decision on whether or not your DPP can go ahead, even if a creditor hasn’t given their approval.
- Your creditors are asked if they agree your application is fair and reasonable. If they don’t respond, they’re deemed to have approved it
- If your circumstances change, you may be able to apply for crisis breaks, variations or payment holidays
How long a DPP can last for?
There’s no maximum time that a DPP can last for. Stepchange will only apply for a DPP on your behalf if it would last less than 20 years, because if it were to last longer than that it’s likely that other solutions would be more suitable to you.
However, you can find a money advisor of your own if you wish to apply for a DPP of longer than 20 years.
Find out more about setting up and managing a debt payment programme through the Debt Arrangement Scheme.
How might a DMP help me deal with my debts?
As with a DPP, your creditors don’t have to agree to your plan, but we’ve found that most creditors will accept DMP payments.
How it works:
- You make a single monthly payment, based on what you can afford, which is shared across your creditors
- Your creditors also don’t have to agree to stop contacting you to ask for payment, although most will accept the payments you make through your DMP
- Many creditors will also freeze interest and charges for a time while you deal with your debt problems, however, they are still able to charge interest and charges if they choose to
- Your DMP will not be recorded on a register, but the payments will be recorded on your credit file
- Because a DMP is an informal solution, it’s still possible for creditors to take action to recover the money you owe them by using any assets you have, including property
- For example, they could apply for an ‘inhibition order’ on your home, which could result in you not being able to sell it without getting permission from your creditors
How long can a DMP last for?
With a debt management plan (DMP) you pay back your debts at an affordable rate, over a reasonable period of time, usually no more than 10 years, although this could be longer, depending on your circumstance.
Find out more about getting a debt management plan.
Free multilingual debt guide
We've put together a free, downloadable guide to help you deal with your money worries
Our guide to dealing with debt in Scotland covers debt collection processes, where to get help, budgeting and what to expect from a debt advice session. It’s available to download in English, Urdu, Punjabi and Polish. Find out more.