Advertising Substantiation

Advantages of the Debt Arrangement Scheme (DAS)

• You make one, affordable payment to repay your debt(s)
• Your creditors cannot take legal action against you to recover the debts owed to them
• Any assets you own, including your home, are unaffected by DAS
• Interest, fees and charges are frozen from the date your application is made and are written off when your DPP is completed
• There are no fees to pay to apply for or have your DPP administered – see section on Fees for further info
• An earnings arrestment will be stopped on the approval of your DPP under DAS
• If your creditors reject your application, they can be forced to comply if the proposal is deemed to be ‘fair and reasonable’ by the DAS Administrator
• Mortgage, secured loan and rent arrears can be excluded from your DPP
• You do not have to pay your full disposable income into your DPP, a reduced amount can be offered to allow you more flexibility, subject to creditors’ approval
• Payment breaks are available if you experience a reduction in income, for example, due to illness or unemployment or an unplanned increase in expenditure.
• If your circumstances change permanently, then your DPP can be varied to reflect these changes, without putting your DPP at risk

Disadvantages of the Debt Arrangement Scheme (DAS)

• In DAS there is no debt written off, only relief from further interest, fees and charges. Therefore, in DAS you are deemed to be repaying your debts in full and the repayment period is likely to be longer than the alternatives of a Protected Trust Deed or Sequestration
• Your credit rating may be adversely affected, in a similar way to Trust Deeds and Sequestration
• Your DPP may be rejected by creditors and deemed to be not ‘fair and reasonable’, meaning you may need to consider other options such as a Protected Trust Deed
• Your DPP will be registered on the DAS Register, a publicly available online register of all DPPs in Scotland
• If you do not comply with the conditions of your DPP then it may be revoked. Creditors are then free to pursue legal action against you and to add back their interest, fees and charges

Advantages of Full Administration route to Sequestration

• It is possible to write off 100% of your debt
• Your Trustee will deal with your creditors – taking away the pressure of the constant phone calls and distressing mail
• Creditors cannot take legal action against you to recover their debt
• Interest, fees and charges are frozen – the creditors can only claim for the outstanding balance due as at the date of sequestration
• One, affordable monthly payment will be made, giving an allowance for all general living expenses and household bills
• You will normally be discharged from sequestration after 1 year (assuming the Trustee does not have cause to delay the discharge)
• The application to the AiB does not involve court proceedings
• Sequestration stops or removes the effect of existing diligence e.g. an earnings arrestment or an Inhibition

Disadvantages of Full Administration route to Sequestration

• Assets of a significant value are likely to be sold for the benefit of creditors
• You are unable to act as a director of a limited company or be involved in the formation, promotion or day-to-day financial management of a limited company.
• It may harm your employment prospects, both now and in the future
• Student Loans are not discharged by Sequestration
• Adverse impact on your credit rating
• £150 application fee* to be paid to the Accountant in Bankruptcy
• You cannot apply for credit of £2,000 or more, without telling the creditor that you have been made bankrupt and are under this restriction.
• You cannot apply for credit of any amount when you already have debts of £1,000 or more, without telling the creditor that you have been declared bankrupt and are under this restriction.
• If you are self-employed, you must tell anyone that you do business with the name of your business when they went bankrupt.
• Your bankruptcy will be registered on the Register of Insolvencies, a publicly available online register of all insolvencies in Scotland
• You are unable to act as a Member of Parliament or a Justice of the Peace.
• You may be in breach of certain contractual obligations by being made bankrupt e.g. tenancy/lease agreements, various licences, employment contracts, HP agreements, insurances etc.

*If you are in receipt of certain prescribed social security benefits (e.g. Universal Credits, Child or Working Tax Credits) or you are assessed as having no surplus income then there is no application fee payable.

Advantages of the Minimal Asset Process route to Sequestration (MAP)

• It is possible to write off 100% of your debt
• Free to apply for
• Your Trustee will deal with your creditors – taking away the pressure of the constant phone calls and distressing mail
• Creditors cannot take legal action against you to recover their debt
• Interest, fees and charges are frozen – the creditors can only claim for the outstanding balance due as at the date of sequestration
• You will normally be discharged from MAP after 6 months
• The application to the AiB does not involve court proceedings
• Sequestration stops or removes the effect of existing diligence e.g. an earnings arrestment or an Inhibition

Disadvantages of the Minimal Asset Process route to Sequestration (MAP)

• You are unable to act as a director of a limited company or be involved in the formation, promotion or day-to-day financial management of a limited company.
• It may harm your employment prospects, both now and in the future
• Student Loans are not discharged
• Adverse effect on your credit rating
• For 6 months after your discharge, you cannot apply for credit of £2,000 or more, without telling the creditor that you are a discharged bankrupt
• For 6 months after your discharge, you cannot apply for credit of any amount when you already have debts of £1,000 or more, without telling the creditor that you are a discharged bankrupt
• For 6 months after your discharge, if you are self-employed, you must tell anyone that you do business with the name of your business when you were declared bankrupt
• You are unable to act as a Member of Parliament or a Justice of the Peace.
• You may be in breach of certain contractual obligations by being made bankrupt e.g. tenancy/lease agreements, various licences, employment contracts, HP agreements, insurances etc.

Alternative solutions

Depending on your circumstances, there are alternative ways of managing your unaffordable debts. See pages 20-21 of our free Scottish debt help guide for more info.

• Statutory Moratorium
• Debt Management Plan
• Full & Final Settlement
• Informal Negotiation
• Debt-Write-Off
• Debt Consolidation
• Remortgage/Secured Loan
• Equity Release