How does it work?
We work out what money you have left over to repay your debts after covering your living costs. These are things like your food, housing and energy bills. We will check the information you gave us and contact you if we have any questions or need more details.
You make regular payments to us, which we then share between the people you owe money to. We recommend a monthly direct debit but there are other ways to pay. Please let us know if a direct debit is not suitable.
When you apply you can choose how much you want to pay to your debts. But you need to know that your creditors will be able to see:
- The amount you have left in your budget
- Your surplus
- The amount you have chosen to pay and if this is less than your surplus
As an approved money adviser, we are able to set up DPPs. However, you can choose another money adviser to set up your DPP if you want.
By law, the people you owe money to must stop adding interest and charges. These must stop when they get your DPP proposal.
You do not pay any fees, as these are paid by the people you owe money to. All of your repayment goes towards your debt. The fees paid are 20% of your monthly payment to us and 2% to the Accountant in Bankruptcy. These fees cover the running costs of the DPP.
Which debts are included in my DPP?
You must keep up with your priority payments.
These are not part of your DPP:
- Secured debts. These could be mortgages, secured loans and hire purchase on vehicles
- Council tax, rent and rates, and utility bills
If you have fallen behind on any of them, you can include the arrears in your DPP. Arrears is money which is overdue on your important payments.
But you should continue to make your usual payments for these directly. Find out more about priority payments.
If you cannot afford to make your usual payments for your priorities, you should contact us as soon as possible to reduce the risk of your DPP being stopped. You should also get in touch with the people you owe money to. You will need to ask them to agree to you making smaller payments in the short term.
You may need to increase your DPP payment once any of these debts are paid off:
- Mortgage
- Secured loan arrears
- Rent arrears
- Fines
- TV license arrears
- Hire purchase (HP), personal contract purchase (PCP), conditional sale and lease agreements. For these debts, any arrears will be included in the DPP
- Loans from friends and family
Your money advisor will tell you more about this.
Please be aware:
- You must keep up with payments so your DPP is not cancelled. You can contact us if you are worried about being able to pay or what options are available if your DPP is cancelled
- Your DPP will be recorded on the DAS register until it is completed
- It will take more time to pay what you owe than if you were making your full contractual payments
- Your DPP is shown on your credit file for six years from the date it starts. You may find it harder to get credit in the future
Conditions of a DPP
You will need to agree:
- To make your regular DPP payment to us
- To carry out a review of your finances with us at least once a year
- To pay your usual regular bills, such as council tax and mortgage or rent
- Not make extra payments to debts included in your DPP
- To contact us before borrowing any money, during your DPP to understand how this could affect your plan. There are strict limits on how much you can borrow
- To tell us about any change in your circumstances. You will need to let us know within 10 days if you change your address
- To give us any information we request within 10 days of being asked
Your DPP could be cancelled if you don’t keep to these conditions
Please contact us if you are worried you cannot meet any of these conditions. Or if you are worried about being able to make your regular DPP payment.
The Accountant in Bankruptcy can cancel your DPP if you do not keep to these terms. If your DPP is cancelled you are allowed to ask for a review. You can ask the DAS Administrator for this. They are responsible for approving your DPP. Or, you can look at other options with us to help deal with your debts.
You will still get the protection of your DPP until the outcome of the appeal is known.
If your DPP is cancelled, you will need to:
- Apply for a new DPP
- Or, find another way to deal with your debts.
If this happens interest and charges could be added to your debts. This could be backdated to when you started your DPP. We can give you advice and support.
Your DPP will be recorded on a public register
Your DPP will be put on the DAS Register until it is completed. This means a record of your DPP will be available online for anyone to view.
If your application for a 'moratorium' is approved: It will be recorded on the Register of Insolvencies for six months.
Speak to your money adviser if you think you would be at risk if your details were on the register.
How will my credit file be affected?
Each time you miss a payment it is reported on your credit file. When you continue to miss payments, you are at risk of your accounts ‘defaulting’. These are shown on your credit file.
The payments you will make through your DPP are smaller than the amounts you first agreed to with your creditors. These are called your 'contractual payments'. This means DPP payments will be recorded as 'partial payments' on your credit file.
You can rebuild your credit file later when you have your money situation under control. It is better to focus on handling your debts first.
What happens if my circumstances change?
You need to let us know. It could be that a DPP is no longer the best option for you. We will look at your new circumstances. Then we will advise you the best way to deal with your debts.
Small changes to your payment might not cause any problems. But if the amount you can afford to pay reduces you need to let us know . Then we can talk through your options. Your DPP could be amended, or you may be able to get a payment holiday.
Your DPP payments are protected
While we hold your money, it is covered by the Financial Services Compensation Scheme (FSCS), which can pay compensation if we are unable to meet our financial obligations. You can find out more on the FSCS website.