Personal
Difficulties > Debt Arrangement Scheme -
a Creditor's Guide
The information on
this page is taken from a booklet produced by the Scottish
Executive.
Introduction
Many people borrow
too much but want to repay what they have borrowed. However,
it is not uncommon for a person to be able to do so only
if they are given more time than the normal terms of business
allow.
The Debt Arrangement
Scheme "DAS" is a form of debt management rather than debt
relief. It is a way for individuals to avoid becoming bankrupt
or signing a trust deed.
In particular,
one of the key aspects of the DAS is that it is designed
to allow people to stay in their home.
A debt management
programme is likely to be more attractive to creditors than
complete write off and, as a result it may well be in creditors'
interests to agree to a scheme which gives a debt management
programme a chance of success.
One of the fundamental
aspects of the success of the DAS process is that creditors
should always consider waiving, or freezing, interest and/or
charges. In some cases, creditors may also have to consider
discharging/waiving part of the original debt because, in
exchange, creditors should be paid more than they will receive
if a payment plan is not agreed, or fails. This is likely
to be the case even when administration charges are taken
into account.
The Debtors (Scotland)
Act 1987 introduced the concepts of a time to pay direction
(which a court can make when it grants decree) and a time
to pay order (which a court can make when a creditor attempts
to enforce a decree). Time to pay orders and time to pay
directions are only available through court, and only apply
to single debts. Thus, they are of little value where an
individual has multiple debts. The DAS does not require
immediate court intervention and hence, is a viable alternative
for consideration.
The Scottish Parliament
approved the Debt Arrangement and Attachment ( Scotland
) Act 2002 "the 2002 Act" and the detailed rules set out
the Debt Arrangement Scheme ( Scotland ) Regulations 2004
"the DAS Regulations".
The DAS process
involves five parties: an individual with debt problems,
creditors, an approved money adviser, a payment distributor,
and the Scottish Executive "the DAS administrator".
The money adviser
applies to the DAS administrator for approval of a debt
payment programme "DPP" proposed by the individual. If the
programme is approved, the payments distributor selected
by the money adviser divides the monies available amongst
creditors in an appropriate and regular manner.
A standard debt
repayment plan and a DPP are similar because:
- the individual must want to repay his debts.
- the money adviser works out the surplus income and makes
a pro-rata offer of payment to all creditors.
- the individual and the creditors can reach whatever
agreement suits them. Once the creditors agree to the
situation, a DPP is approved by the DAS administrator.
- debts and interest can be written off in a DPP by prior
agreement with each creditor.
However, a repayment
plan and a DPP differ in a number of important ways and
it is these differences that may make DAS an effective tool:
- DAS is a statutory scheme and has the force of law.
- if a creditor says nothing they are presumed to agree
(deemed consent).
- DAS is flexible:
- a DPP can be varied whether or not creditors agree.
- a 'fair and reasonable' test applies where there
is incomplete agreement and means that a DPP can,
in principle, match any circumstances.
- Creditors will find it difficult to block a fair and
reasonable DPP from progressing:
- a single dissenting creditor must be owed more
than one half of the total debt.
- a group of dissenting creditors must be owed more
than 60% of the total debt.
- When a DPP is approved the individual is freed from
the threat of:
- arrestment, attachment and other diligences.
- bankruptcy.
This guidance
does not have the force of law and legal advice is always
encouraged before specific action is taken.
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Overall
approach
If an individual
owes money and finds that he cannot pay all his creditors,
he might seek advice. Accredited money advisers will consider
all the options available. A DPP under DAS is one of these
options if the person has surplus income after he has paid
his essential outgoings e.g. mortgage, fuel, food costs
etc.
Anyone considering
a DPP must consult an accredited money adviser approved
by the DAS administrator. Information on how to do this
is available at www.moneyscotland.gov.uk
. Individuals considering this process should not follow
advice from any person or company who cannot demonstrate
proper accreditation.
The money adviser
will contact each creditor and advise that the person is
unable to meet his contractual obligations. They should
always provide you with a mandate signed by the person giving
them authority to act. If they do not provide a mandate
showing that the money adviser has authority to deal with
the person's financial affairs, ask to see it. If it is
not forthcoming you should inform the DAS administrator
and decline to continue dialogue with the money adviser.
The DAS administrator
can be contacted at:
DAS administrator
telephone: 0131
473 4600
George House
fax:
0131 473 4737
126 George Street
email: das@aib.gov.uk
Edinburgh
EH2 4HH
As part of the
debt confirmation process the accredited and authorised
money adviser will ask you to confirm:
- the principal debt.
- the interest rate (if any).
- the original term of the debt.
- the contractual payments that the person has contracted
to pay.
- the balance outstanding.
- the amount of arrears.
- any charges that may be incurred e.g. penalty charges
on missed payments (which must have been stated in the
original contract).
- details of any existing payment protection e.g. insurance.
It is probable
that the money adviser will ask you to waive both current
and ongoing interest. The Scottish Executive has stated
its hope that all creditors will, as a group and in the
normal course of this procees, agree to waiving interest
on the basis that it will contribute to the likely success
of the DPP.
If you do not
waive interest, the money adviser will try and negotiate
that you freeze interest or agree a fixed rate for the interest.
It is important to note that if a creditor insists on a
variable rate of interest no interest can be paid during
the DPP because it will be too complex to calculate and
factor into creditor payments. Thus, you may find that you
will have to pursue the person for the accrued interest
when the DPP has finished.
At this stage,
neither you nor the individual are committed to a DPP. The
money adviser is assessing the options such that a plan
of action can be agreed with the individual in the best
interests of all parties.
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Applying
for a DPP
Before applying
for a DPP, the money adviser must submit a formal proposal
to you on form 4: notification to creditor of application
for approval of a debt payment programme. This form is completed
and sent to each creditor and is designed to provide the
necessary information for you to make a decision. It provides
sufficient information such that you can identify the debt
and understand the payment proposal being offered. The form
will state:
- the total amount the person owes to you.
- the amount you will receive from each instalment.
- the frequency of the proposed payments to you, and
- the proposed length of the debt payment programme.
If you wish to
respond to the proposal on form 4 you must do so within
21 days. The 21 day period starts from the date of posting
or electronic transmission to you. The form has a section
called form 4a at the end which you can use for your response.
There are four
possible responses from a creditor:
- Consent
- this is where you write back within the 21
day period and agree to the proposal.
- Deemed
consent - this is where you do not respond to
the proposal within the 21 day period. In this case, you
are deemed to have agreed to the proposal.
- Non-consent
- this is where you write back within the 21
day period and object to the proposal. Unless you object
on either of the grounds noted below, you are considered
to have "not consented".
- Objection
- this is where you write back and object on
either of the two grounds below:
- you consider that the person should be sequestrated
(made bankrupt). You should not object on these grounds
unless the person is apparently insolvent because
a person cannot be sequestrated unless he is apparently
insolvent. Apparent insolvency is a technical term
that is explained in a booklet produced by the accountant
in bankruptcy and you can obtain a copy of the booklet
by writing to the accountant in bankruptcy at the
same address as the DAS administrator (see 2.3 above),
by telephoning 0845 762 6171 or by downloading it
from the website at www.aib.gov.uk
.
- you believe that the person is in possession of
heritable property with substantial unsecured value.
If you object for this reason, you should be able
to produce appropriate evidence (but see appendix
3 for future guidance).
If you object,
you and all the creditors will be given notice of a court
hearing. You, as an objecting creditor, will be expected
either to appear or be represented at your own cost in order
to give evidence in support of your objection. If you don't
appear your objection is unlikely to succeed. The overall
intention is for all DPP's to be approved if the accredited
money adviser supports the proposal.
At the end of
the 21 day period, the money adviser and person need to
consider every creditor response and whether it is appropriate
to apply to the DAS administrator for a DPP. In coming to
this decision they will take into account the following:
- if all the creditors consent, or are deemed to have
consented, to the DPP, the DAS administrator will approve
the DPP regardless of the amount of the debt or the length
of the proposed programme.
- the DAS administrator can dispense with the consent
of a creditor where the programme is otherwise fair and
reasonable, and:
- the debt due to an non-consenting creditor is 50%
or less of the total debt included in the proposed
DPP, or
- the amount due to all creditors who do not consent
(this does not include those who object - see paragraph
3.3 above) is less than 50% of the total amount of
debt included in the proposed programme.
In deciding whether
a programme is fair and reasonable, the DAS administrator
will take into account a number of criteria which are set
out in appendix 1.
Where the DAS
administrator cannot dispense with the non-consent of a
creditor, or creditors, or a creditor objects, the administrator
must refer the application to the sheriff who will decide
whether or not it should be approved.
If approval is
referred to the sheriff, you will be given notice of a court
hearing. You should appear or be represented if you are
given notice. If you do not appear the court is more likely
to approve the application.
A sheriff can
only make a decision to approve or not approve a DPP. He
cannot sequestrate a person at this hearing.
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Approval
of a DPP
If a DPP is approved
the person subject to it will be known as "the debtor".
Standard conditions with which the debtor must comply will
always be attached to it. These are listed in appendix 2.
Further discretionary conditions may be imposed where the
debtor's particular circumstances are relevant and these
conditions are listed in appendix 3. It should be noted
that appendix 3 makes particular reference to a debtor retaining
the family home.
When the DAS administrator
makes a decision to approve a DPP, or receives notification
from a sheriff that a DPP is approved, the money adviser
will record this and the DAS register will be updated to
shown 'an application for a programme that has yet to be
approved'.
The approval of
a DPP and the appropriate update of the register to show
'an approved programme' will take place automatically at
midnight on the second day after the register is updated
to show 'a notice that a programme is to be approved'.
On receiving confirmation
of approval of a DPP, the money adviser will notify all
the other parties concerned. These are:
- the debtor.
- each creditor known to the money adviser.
- the clerk of the appropriate court if there is;
- a conjoined arrestment order (using the appropriate
form),
- a time to pay order under either section 1 or section
5 (time to pay orders) of the Debtor's ( Scotland
) Act 1987, or
- a time order under section 29 (time orders) of the
Consumer Credit Act 1974.
- the debtor's employer if, and only if, payments are
to be made from the employer directly to the payment distributor.
This must be done on form 6: payment instruction to an
employer. This form must be accompanied by a signed debtor's
authorisation.
- the payments distributor. The payments distributor will
require full details of the payment plan so that arrangements
can be made to receive money from the debtor and to make
payments to all creditors.
The DAS legislation
provides that a participant in a DPP will make a single
periodic payment to a single point: the payments distributor.
The payments distributor will pay the amounts specified
in the DPP to each creditor, taking into account each creditor's
preference for method of payment.
The payments distributor
will not charge more than 10% of the total payment sum for
their services in distributing the money owed to you. It
is anticipated that this charge will be deducted from the
monies prior to distribution.
When a DPP is
approved, the money adviser will give your details to the
payments distributor. The payments distributor will contact
you to arrange how the monies are to be paid to you.
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The
effect of approval
When a DPP comes
into force, it impacts on any existing arrestment against
earnings or property. The approval of a DPP has the effect
of a recall of such arrestments and the DAS administrator
will send a notice of recall to each employer or party in
possession of either funds or property arrested.
If you have attached
any of the debtor's property, you can remove the attached
property, but only if the debtor and anyone else in possession
of the attached article has already been notified of the
date of the auction. [Debt Arrangement and Attachment (
Scotland ) Act 2002, section 27(4)].
If an article
has been removed, or notice has been given that it is to
be removed under an exceptional attachment order, the DPP
will not prevent the article from being auctioned. [Debt
Arrangement and Attachment ( Scotland ) Act 2002, section
53].
The DPP means
that any conjoined arrestment order is recalled. The money
adviser will deal with this as noted at paragraph 4.4 above.
You must not offer
more credit to the debtor whilst they have a DPP. The only
exceptions are:
- credit approved by a variation of a DPP (see paragraph
6 below).
- further credit given as part of a cyclical loan agreement
which was already in operation when the DPP was approved.
In this case, the payment by the debtor must not vary
because this credit has been given.
- trade credit incurred by the debtor in the ordinary
course of business. If the debtor applies for this credit,
he must show you form 5a (short form of notification of
approval of a debt payment programme).
- credit for emergency repairs as specified in the regulations.
If the debtor applies for this credit, he must show you
form 5a.
- credit for reasonable funeral expenses for an immediate
family member. If the debtor applies for this credit,
he must show you form 5a.
If you give credit
to the debtor for any of the above reasons, the debtor must
repay you at the contracted rates. The DPP may need to be
varied either to reflect that the debtor has less surplus
income or to include the new credit. You may not instigate
any legal action to enforce payment of a debt because you
have been given notice of the DPP. [Debt Arrangement and
Attachment ( Scotland ) Act 2002, section 4(5)].
If for any reason
credit is given to a debtor who has informed you he is in
a DPP you will still be able to seek a decree against the
debtor, but you will not be able:
- to serve a charge for payment in respect of,
- commence any diligence to enforce payment of, or
- found on in presenting, or concur in the presentation
of, a petition for the sequestration of the debtor's estate,
for as long as the DPP is in force.
Thus, if you do
give credit, you will not be able to take action to recover
such credit until the DPP is either completed or revoked.
If you have given credit because the debtor has not informed
you he is in a DPP, such non-disclosure will be grounds
for revocation of the DPP.
You must not try
to persuade a debtor to withdraw from a DPP or make additional
payments in respect of a debt included in the programme.
If you are a creditor organisation e.g. a debt collection
agency, that has an administrative system that generates
electronic reminder letters or demands for payment, you
should take care that you do not breach this provision.
You must, on request
by a money adviser acting for a debtor, provide a statement
of all the debtor's liabilities and must notify a money
adviser of any liability where you hold a security against
a co-obligant of the debtor.
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Variation
of a DPP
There are situations
where it is appropriate for a DPP to be varied and this
can result in a number of changes:
- the amount you receive might be increased.
- the amount you receive might be reduced.
- the length of the DPP might be reduced.
- the length of the DPP might be increased, or
- a new condition(s) might be attached to the DPP.
The DAS administrator,
or the sheriff if appropriate, will decide whether there
will be a variation. An application for one has to be made
to the DAS administrator on form 8: application for a variation
of a debt payment programme. Such an application may be
made by:
- you.
- another creditor, or
- the money adviser on behalf of the debtor.
Before you apply
for a variation, you must try and agree the change with
the money adviser. The DAS administrator will not consider
your application unless you can demonstrate a reasonable
attempt to do so.
The DAS administrator
can only agree a variation in a limited set of circumstances.
Grounds for variation apply whether you, another creditor,
or the money adviser is seeking a variation and are:
- where a debtor agrees with every creditor that the programme
should be varied.
- where the debtor has an increase in surplus income.
A variation can be used to increase the instalments paid
to creditors and thus pay off the DPP more quickly.
- where the debtor has a decrease in surplus income. A
variation can be used to decrease instalments paid to
creditors and extend the DPP whilst still allowing the
debtor to pay off his debts.
- where a debtor and a creditor agree that the debtor
no longer needs to pay the creditor what is owed.
- where the debtor and the creditor agree that the creditor
will waive the interest previously demanded.
- when a debt due at the approval of the programme was
omitted from the DPP because it was overlooked, or someone
made a genuine mistake.
- where a future debt, which was not quantifiable when
the DPP was approved, becomes due for payment. This might
happen, for example, if the debtor has credit which they
do not have to start paying off for some months.
- where a contingent debt, which was not quantifiable
when the DPP was approved, becomes due for payment. This
might happen if the debtor has been a guarantor for someone
else's debt and the creditor has called up the guarantee,
and
- if the debtor has an emergency and needs credit to meet
an essential requirement e.g.:
- the debtor's house needs to be repaired in order
to make it sound i.e. dry rot, leaky roof, broken
window, etc.
- a car needed for business or to get to work is in
need of repair.
- the washing machine or other essential domestic
appliance breaks down.
- there is a medical emergency that requires payment.
- the debtor requires the services of a plumber or
electrician, or
- the debtor needs help to pay for the funeral of
an immediate family member.
Nobody can apply
for a variation for any other reason.
If you wish to
apply for a variation, you must send a copy of the application
to the money adviser, the debtor, and all other creditors.
If you do not know the details of the other creditors, you
can ask the money adviser to send a copy of your application
to them.
If the money adviser
or another creditor applies, they will send a copy of their
application to you.
When the DAS administrator
receives the application, it will be recorded in the DAS
register as 'an application for a variation of an approved
programme'. The money adviser will be advised that the application
has been received. If the DAS administrator refers the application
to the sheriff, the DAS register will be updated to show
'an application by the DAS administrator to the sheriff
for variation of an approved programme'.
When considering
an application for variation, the DAS administrator, or
sheriff if appropriate, will take into consideration:
- the total amount of debt.
- the length of time the programme will operate under
the variation.
- the method and frequency of payments under the variation.
- any comments made by the money adviser.
- any of the debtor's assets which could be sold to pay
off debts.
- the views of the debtor.
- the views of any creditor taking part in the DPP and
the creditor making the application if they are not already
in the DPP, and
- any other factor the DAS administrator or sheriff considers
to be important.
Thus, your view
is taken into consideration whether or not you have made
the application.
If an application
for variation is approved, the money adviser will inform
you and tell you what effect the variation will have on
you. Also, the DAS register will be updated to show 'a variation
of an approved programme'.
If an application
for a variation is not approved, the money adviser will
inform you. The DAS administrator will have given the money
adviser the reasons for the decision not to vary the programme.
The DPP and the DAS register will revert to the status it
was before the application for variation.
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Revocation
of a DPP
A DPP is revoked
automatically if the debtor petitions for his own sequestration
and the sheriff awards it. In such cases, the DAS administrator
will remove the debtor's name from the DAS register and
inform the money adviser who will inform you. All payments
being made to you under the DPP will stop.
All other revocations
follow an application to the DAS administrator for revocation.
An application
for revocation can be made by:
- you.
- another creditor.
- the money adviser on behalf of the debtor, or
- the money adviser where aware that the debtor is in
breach of a condition of the DPP.
The only circumstances
when you or another creditor can apply for a revocation
of a DPP are:
- if a debtor does not have a money adviser without reasonable
cause.
- if a debtor fails to satisfy any condition of the DPP
without reasonable cause. These include both the standard
conditions (appendix 1) and any discretionary condition
applied to the DPP (appendix 2).
- a payment to be paid under the DPP becomes due and a
sum due for previous payments of not less than the total
of 2 payments is outstanding. This means that the debtor
owes more than the sum of 2 instalments and has missed
or underpaid at least 3 instalments, or
- if a debtor makes a statement in an application, whether
for approval or variation, which the debtor knows to be
untrue.
The money adviser
can also apply for these reasons. In addition, the money
adviser must apply for a revocation if the debtor has not
made any payments under the programme for 12 months.
If either you
or another creditor apply for revocation of a DPP, there
is no obligation to inform the money adviser, the debtor,
or the other creditors. However, the DAS administrator will
inform the money adviser who will contact the debtor so
that the debtor has an opportunity to make appropriate representation
to the DAS administrator.
Only the DAS administrator
can make a determination on an application for revocation.
Currently, there is no provision for referral to the sheriff.
When deciding
on an application for revocation of a DPP, the DAS administrator
will consider:
- whether the application complies with the grounds for
revocation (as set out in paragraph 7.3 above).
- any statement made by or on behalf of the debtor.
- the nature of any failure or untrue statement,
- any factor that tends to indicate whether or not the
programme will be successful, and
- any other factor that the DAS administrator considers
appropriate.
If an application
for a revocation is rejected, the money adviser will inform
you. The DAS administrator will have given the money adviser
the reasons for the decision not to revoke the programme.
The DPP and the DAS register will revert to the status before
the application for revocation.
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Completion
of a DPP
A DPP reaches completion
in the following circumstances.
- At the end of the agreed term of the DPP. If the debtor
makes all the payments he has contracted to do, completion
of the DPP will be at the time specified when the DPP
was first approved, or if it has been varied, at the most
recent variation. In this case, the debt in the DPP will
have been paid in full.
- At the end of the agreed term of the DPP. If the debtor
has missed or underpaid a few times, but this has not
warranted a variation, completion will be when the debt
in the DPP has been paid in full. This will be slightly
later than the time specified when the DPP was first approved,
or if varied, at the most recent valuation.
- If the debtor makes an offer of composition which is
accepted by you and all the creditors remaining in the
DPP.
- If you and all other creditors in the DPP agree in writing
to completion before the scheduled end of the programme.
The money adviser
will send you written notification of completion.
Appeals
Appeals can be
made as follows:
- to the sheriff by:
- a debtor against the DAS administrator's decision
not to approve a DPP.
- by a creditor named in a DPP application against
a decision by the DAS administrator to either dispense
with their non-consent or to approve a DPP.
- by a debtor or a creditor who has applied for a
variation on the grounds in regulation 38(1)(d)(e)
against the DAS administrator's decision to:
- attach a discretionary condition (appendix 2).
- approve, or refuse to approve, a variation of
a programme, or
- revoke a programme.
- to the sheriff principal with the leave of the sheriff
by:
- a debtor against a decision by the sheriff to refuse
a DPP, or
- a creditor named in a DPP application against a
determination of a sheriff to approve a DPP.
If you wish to
appeal, it must be on a point of law i.e. a mistake in fact.
However, not all factual mistakes will constitute a point
of law and you may wish to obtain legal advice before considering
an appeal.
Appeals to the
sheriff are either by note in a court process or summary
application. The procedure is set out in the rules of court
and legal advice is recommended.
All appeals to
the sheriff principal must be made by note of appeal and
can only be made with the leave of the sheriff. The procedure
is set out in the rules of court and again, legal advice
is recommended.
In any appeal,
the decision of either the sheriff or the sheriff principal
is final. This means that only one appeal is allowed. It
is not possible to appeal to the sheriff against a decision
of the DAS administrator and then appeal the sheriff's decision
to the sheriff principal.
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Register
The DAS administrator
will maintain a web based register which will be accessible
on payment of a fee. The fees note(s) can be provided by
contacting the DAS administrator.
The DAS register
will contain the following information:
- application for a programme that has yet to be approved.
- application by the DAS administrator to the sheriff
for determination of a programme.
- details of whether programme is to be approved.
- approved programme.
- application for variation of an approved programme.
- application by the DAS administrator to the sheriff
for determination of a variation of an approved programme.
- a variation of an approved programme, and
- an appeal to the sheriff, or sheriff principal.
The DAS register
will also include for each debtor who has applied for approval
of a debt payment programme, or who is taking part in a
programme, a record of the debtor's:
- name, including any former name(s).
- age.
- home address or addresses, and
- business address (if any).
It will also include
the business address of the debtor's money adviser or the
money advice body for that adviser.
You can find guidance
on who can gain access to the DAS register and in what circumstances
on the website at www.moneyscotland.gov.uk
.
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Optional
payments
In the list of
standard conditions to be found at appendix 1, reference
is made to continuing liabilities. These are defined in
DAS regulation 2 and relate to sums such as rent, utilities
and council tax which are deducted from income when calculating
the surplus remaining available for distribution amongst
creditors to pay debts. Normal payments of this type are
not included in a DPP, although arrears can be included.
Provision is also
made for payment of continuing liabilities to be made through
a payments distributor. Some debtors may consider it useful
to pay their ongoing liabilities by automated means at the
same time as their debts. This may only be done where the
debtor and the recipient of the essential payment have agreed
to it and reached agreement on who will be liable for the
payment processing administration charge.
If you wish the
debtor to pay a continuing liability due to you, you must
negotiate with them although the money adviser should be
able to help in this regard. The payments distributor can
charge you an extra 10% for this service. You may ask the
debtor to meet this extra cost.
Appendix
1
Fair and
reasonable
In some circumstances
the DAS administrator or the sheriff will only approve a
DPP or a variation of a DPP if it is considered to be 'fair
and reasonable'.
The factors that
the DAS administrator or the sheriff will consider in deciding
whether a proposal is fair and reasonable are set out in
the regulations and are:
- the total amount of debt.
- the period over which a programme will operate.
- the method, and frequency, of payments under a programme.
- an earlier proposed programme that was not approved.
- a matter specified in regulation 21(2) that would have
prevented an application being made, where the matter
no longer has that effect.
- the involvement of the debtor in a
- debt payment arrangement, including a debt payment
programme under the regulations.
- time to pay direction under section 1 (time to pay
directions) of the Debtors (Scotland) Act 1987, or
time to pay order under section 5 (time to pay orders)
of that Act, or
- time order under section 129 (time orders) of the
Consumer Credit Act 1974.
- the extent to which creditors have consented, deemed
or otherwise, or objected to a programme.
- any comment made by the money adviser.
- an asset of a debtor that could be realised to pay debts
and should be included in a programme.
- the views of a creditor taking part in the programme
and of any creditor applying for variation.
- the views of the debtor, and
- any other factor considered appropriate.
What is deemed
to be 'fair and reasonable' will be flexible in order to
reflect each set of circumstances. If, in the view of a
money adviser, an application is fair and reasonable they
should submit it. In relation to the length of a programme,
the DAS administrator is likely to approve anything under
5 years in duration and refuse to approve anything over
15 years. Between these periods will be a matter for individual
assessment.
The level of payment
considered fair and reasonable is likely to be subject to
what payment distributors will accept.
Any level of debt
is likely to be acceptable because the accumulation of such
debt occurred before the DPP commenced. Information on what
each payment distributor offers is available on the list
of payment distributors kept by the DAS administrator.
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Appendix
2
Standard
conditions (regulation 29)
These conditions
state that that once a DPP is approved the debtor shall:
- make all payments under a programme as they fall due.
- pay a continuing liability when due for payment.
- except for a continuing liability, make no payment to
a creditor taking part in a programme other than a payment
under the programme.
- not apply for or obtain credit beyond that permitted
by regulation 35(1)(b), or by a variation of a programme
approved under regulation 39.
- notify the money adviser for a programme of any:
- change of address.
- material change of circumstances, within 7 days
of becoming aware of the change.
- within 10 days after receipt by the debtor of a
written request from the money adviser for the programme,
supply the adviser with such information or evidence
as the adviser may request in respect of the income,
assets or liabilities of the debtor.
If the debtor
adheres to these conditions, the potential to secure completion
of a debt payment programme should be enhanced.
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Appendix
3
Discretionary
conditions [regulation 30]
As well as the
standard conditions which apply to all DPPs, discretionary
conditions may be attached.
The conditions
specify that a debtor must:
- realise and distribute amongst creditors the value of
an asset of the debtor other than an asset excepted by
regulation 30(3), see A3.3 below.
- sign and deliver a payment instruction to an employer.
- seek agreement from a creditor to pay a continuing liability
under regulation 34.
- complete and submit when due a tax or duty return or
declaration.
- maintain an emergency fund in accordance with regulation
30(4), or
- be bound by any other reasonable condition intended
to secure completion of the DPP.
Regulation 30(3)
defines an excepted asset as:
- a dwellinghouse or mobile home occupied by a debtor
as the debtor's home, and
- an asset that is exempted from attachment under section
11 of the Debt Arrangement and Attachment (Scotland) Act
2002 or is not a non-essential asset under schedule 2
of the Debt Arrangement and Attachment (Scotland) Act
2002.
These provisions
are aimed at ensuring that a debtor will:
- not lose his home.
- not be deprived of the means of working, and
- in the home, will be left with essential furniture and
other equipment.
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