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HMRC internal manual

Debt Management and Banking Manual

Miscellaneous: Debt Arrangement Scheme: Introduction

The Scottish Executive introduced the Debt Arrangement Scheme (DAS) as a debt management scheme and once approved it has the effect of stopping creditors from taking action to enforce payment.

DAS is a statutory scheme, and has the force of law.

Who can use a DAS

A DAS only applies to individual debtors who reside in Scotland with two or more creditors. Creditors in any part of the UK can be included in the scheme

The DAS scheme does not cover limited companies, partnership firms (although the individual partners are covered), charities, trusts and so on.

Who is involved in a DAS

The DAS has five main players

  • the debtor
  • the creditor
  • the approved money adviser
  • the payment distributor, and
  • the Scottish Executive (the DAS administrator).

The money adviser applies to the DAS administrator for approval of the debt payment programme (DPP) proposed by the client. If the programme is approved the payments distributor selected by the money adviser divides the client’s payment amongst the creditors.

Key Principles of a DPP

The key principles of a DPP are that

  • the client must want to repay their debts
  • the money adviser works out the surplus income, and makes a pro-rata offer of payment to creditors
  • the DAS administrator approves the DPP
  • interest, fees, penalties or other charges which are not owed at the date a DPP is approved are not payable unless the DPP is revoked and ceased to be owed on completion of the programme
  • if a creditor says nothing, they are presumed to agree (deemed consent)
  • a DPP can be varied whether or not the creditors agree
  • the ‘fair and reasonable’ test applies where there is incomplete agreement, and means that a DPP can, in principle, match any circumstances
  • the client is freed from the threat of
  • arrestment, attachment, and other diligences and
  • bankruptcy.

You can find more information at INS3500.