How to apply for the Debt Arrangement Scheme

You can only apply for the Debt Arrangement Scheme (DAS) through a DAS approved money adviser, and they cannot charge you for setting up your debt payment programme. The adviser works out what you can afford, sends your application to the Accountant in Bankruptcy (AiB), and your creditors then have 21 days to respond before a decision is made. If it is approved, your first payment is due within 42 days.

If you are still weighing DAS up, see how the Debt Arrangement Scheme works and the pros and cons of DAS first.

Who can apply?

To apply for DAS, mygov.scot says you need to live in Scotland, owe money to one or more creditors (any amount), have money left over after essential living costs, and be able to repay what you owe in a reasonable time.

You cannot apply if you are bankrupt, in a protected trust deed or under a Bankruptcy Restrictions Order, or if your only debt is already being paid under a time to pay order from a court. You can apply jointly with a spouse, civil partner or cohabiting partner if you both qualify.

How do you find a DAS approved money adviser?

mygov.scot’s step-by-step guide sends you first to free debt advice. The Scottish Government funds organisations that give free, professional debt advice, including Advice Direct Scotland, Citizens Advice Scotland’s Money Talk Team, National Debtline, StepChange and Christians Against Poverty, and many local councils run free money advice services too. Our page on free debt advice in Scotland has phone numbers and opening hours.

Under the DAS regulations, the people who can be approved include:

• money advisers at citizens advice bureaux that are full members of Citizens Advice Scotland
• money advisers working for local councils
• money advisers at advice organisations accredited under the Scottish National Standards for Information and Advice Provision
• licensed insolvency practitioners, and staff they authorise

Whoever you use, the rule on cost is the same: they cannot charge you for setting up the programme. AiB itself cannot give you debt advice, but it can answer general questions about the scheme on 0300 200 2600.

What happens when you apply, step by step?

1. Think about a moratorium. If creditors are pressing you, mygov.scot suggests considering a moratorium on diligence, which pauses most enforcement for 6 months while you get advice. You can apply yourself or through an adviser.
2. Talk through all your options. AiB’s guidance says the adviser must explain every realistic option, such as informal arrangements, bankruptcy, a trust deed and DAS, so you can make an informed choice.
3. Sign a mandate. This is a form authorising the adviser to act for you and contact your creditors.
4. Build your budget. The adviser checks your income and spending using the Common Financial Tool, Scotland’s set budget method, and agrees with you how much of your surplus to offer.
5. Confirm your debts. The adviser checks each balance with your creditors. The figures must be no more than four weeks old when the application goes in.
6. Submit the application. The adviser sends it to AiB through eDEN, AiB’s online DAS system. You do not have to sign it, but the adviser confirms you have been advised and agree to go ahead.
7. Creditors are asked. AiB checks the application and sends it to your creditors. From then, interest, fees and charges are frozen and your details go on the public DAS Register.

What should you have ready?

• a list of everyone you owe, with account numbers and recent letters
• payslips for the last three months, or benefit award letters
• recent bank statements
• your rent or mortgage statement, council tax bill and energy bills
• details of any valuable belongings, such as a car
• if you are self-employed, your business income and costs

How do creditors and AiB decide?

Each creditor has 21 days to respond. They can agree, refuse, or not reply. A creditor who does not reply is treated as agreeing, unless your programme includes only one debt.

• Automatic approval. If creditors owed at least 90% of the debt by value agree (or are treated as agreeing), AiB must approve the programme, whatever the amount of debt or the length.
• The fair and reasonable test. If creditors owed 10% or more object, AiB decides whether the programme is fair and reasonable. The law lists what it must consider, including the total debt, how long the programme will run, any equity in property you own, how and how often you will pay, any earlier programme, how many creditors agreed, your adviser’s comments and any assets that could be sold to pay debts.

AiB can attach conditions to an approval. A condition to sell or remortgage your home is only added if you choose to offer it.

What happens after the decision?

If your programme is approved

• You and your adviser get a letter or email confirming the terms and any conditions.
• A payments distributor contacts you to set up your payments. This may be your adviser’s organisation.
• Your first payment is due within 42 days of approval. You can pay by direct debit, standing order or straight from your wages, but always to the distributor, never to creditors directly.
• You get a login for eDEN to manage your programme.
• Creditors in the programme can no longer serve a charge for payment, use diligence or petition for your sequestration, and existing arrestments on those debts are recalled.

Anyone involved, including you or a creditor, has 14 days from being notified to ask AiB to review the decision.

If your application is rejected

You keep your protection from creditors for 14 days. Your adviser can talk you through asking AiB to review the decision, making a new application, or looking at other debt solutions. If you have already had a moratorium in the last 12 months, you cannot have another one.

Other options include a protected trust deed, which usually lasts 48 months and, if it completes successfully, writes off the remaining debts included in it. It has fees, homeowners may need to release equity, your credit rating is affected for 6 years and your name goes on the Register of Insolvencies. If it fails, creditors can pursue you again. Sequestration and the Minimal Asset Process may also be options. An adviser needs to look at your whole situation.

Official sources

• mygov.scot: how to apply for DAS, step by step
• mygov.scot: get free debt advice
• AiB Notes for Guidance for money advisers: applying for a DPP
• AiB Notes for Guidance for money advisers: how to become an approved money adviser
• The Debt Arrangement Scheme (Scotland) Regulations 2011, regulation 25: fair and reasonable approval