A Debt Payment Programme in Scotland (DPP) is the term used to describe how much you pay back to your debts each month as part of a Debt Arrangement Scheme (DAS).
DAS is a statutory debt management plan, introduced by the Scottish Government in 2004 to help individuals repay their debts in full. If you need a helping hand to get out of debt, DAS could be a suitable option for you. Also referred to as a Debt Payment Plan, a DPP is essentially a financially means-tested method of managing your debts at an affordable level.
As well as individuals, the Debt Arrangement Scheme offers self-employed debt help to sole traders, partnerships, certain limited partnerships, trusts, unincorporated businesses, certain categories of charities and certain corporate bodies are all eligible for the Debt Arrangement Scheme.
Only a DAS-approved money advisor can arrange this on your behalf, however once arranged – it offers you a chance to restructure your unaffordable debts at a level that you are comfortable repaying each month. If you believe you fall into the category of a business rather than an individual for DAS you have to seek advice from a qualified insolvency practitioner.
Once approved, the DPP offers legal protection against creditor enforcement action and freezes interest and charges. A Debt Payment Programme will protect your home and car.
Only available to residents of Scotland, a Debt Arrangement Scheme – is a popular alternative to a Protected Trust Deed and Sequestration.
Note, in England, Wales and Northern Ireland – there is no equivalent solution that offers the same statutory legal protection, the nearest equivalent is more widely referred to as a Debt Management Plan. A DMP is a voluntary arrangement between the individual and creditor basis only.
When considering the Pros and Cons of a Debt Arrangement Scheme, a qualified debt expert should go over all your income, outgoings, debts and other pertinent information to work out what options are open to you.
What Debts Can Be Included In My Debt Payment Programme?
Very similar to the Protected Trust Deed, you can include most types of unsecured debts in your Debt Payment Programme.
✓ Credit Cards ✓ Store Cards ✓ Personal Loans ✓ Bank Overdrafts ✓ Payday Loans ✓ Council Tax Arrears ✓ Utility Bill Arrears ✓ Shopping Catalogues ✓ Credit Unions ✓ HMRC
In a Debt Arrangement Scheme, this can further include some secured debts ✓ Mortgage, Rent + Car Finance arrears. Optional – Missed payments only, terms and conditions apply – contact us for details.
Debts than cannot be included are typically Student Loans, Court Fines and CSA/Child Maintenance Arrears.
DPP Proposal
If DAS is appropriate for your circumstances, the money adviser will calculate an affordable monthly repayment amount and decide how long the plan should last. The adviser then makes a formal proposal to your creditors, who must either accept or reject within 21 days.
If the creditors don’t respond to the DPP Proposal, it’s assumed that they agree with the terms. If a creditor doesn’t approve the DPP proposal, the plan can be put through if the money adviser believes it to be fair and reasonable under the terms of the Debt Arrangement Scheme.
Once the DPP Proposal has been accepted, the interest and additional charges on your debts will be frozen as long as you abide by the DPP terms.
Advantages of a DPP
- A DPP lets you repay your unaffordable debts at a more reasonable rate, while still leaving you enough money for living costs and household bills
- All interest or charges that are being applied to your debts will be frozen at the point when you apply for your DPP
- Your creditors can’t contact you or take any further legal action against you
- If your situation changes you can apply to vary your payment or apply for a payment break, although the term of the break will be added to the DPP
- When your DPP is complete, your unsecured debts will be paid in full
- Once your DPP becomes approved then by law any earnings arrestments currently in force have to be cancelled. Your continuing money adviser will ensure that this happens for you.
Disadvantages of a DPP
- Unlike a Trust Deed which typically lasts a period of 48 months, the DPP lasts until the full debt is written off. Therefore, there is no unaffordable debt written off, other than frozen interest and charges
- Once you’re on a DPP your details will be put onto the DAS register. This is an online register that your creditors can access
- A DPP will appear on your credit file for six years
- If you don’t keep up your payments the DPP could fail, and creditors can add interest charges, or take further action against you
How Can I Apply For A DPP?
You can apply for a Deb Payment Programme under the Debt Arrangement Scheme today with Trust Deed Scotland®.
There are no setup fees for a Debt Payment Programme and the cost of administering the DPP are borne by the creditors. More information available here.
There are a variety of debt solutions available in Scotland to help deal with your debts. You can find out more about the solutions above or you can visit our debt advice in Scotland page.
Give us a call on 01412210999 to find out more.