Is DAS a form of bankruptcy?

DAS – the Debt Arrangement Scheme – is a ‘government-run debt management tool which allows someone in debt to repay their debts through a debt payment programme (DPP)’. That’s how it’s defined by dasscotland.gov.uk, which specifically notes that ‘DAS is not Bankruptcy’.

A DPP under DAS is more similar to a debt management plan: an agreement between a borrower and their unsecured lenders. If they can’t afford to repay the money they owe as they originally agreed, their lenders may agree to accept smaller payments every month until the debt’s been repaid.

Read on to see a few of the differences between DAS and bankruptcy. If you’d like more information on DAS, DebtAdviceNow could help.

Unlike bankruptcy, there’s no actual minimum amount of debt an individual must have to enter a DPP under DAS. Someone in Scotland who wants to be declared bankrupt would need to owe at least £1,500 – but with DAS, what counts is that they must be unable to repay their debt as originally agreed, but still have enough ‘disposable income’ to repay the money they owe over a reasonable period.

In other words, they must have enough money left over to make a fair-sized payment every month after they’ve accounted for their utility bills, food costs, rent/mortgage payments and other essentials – they wouldn’t be required to take the money they need for those costs and put it towards their unsecured debts.

Unlike bankruptcy, DAS won’t ever require a borrower to sell their home. In fact, it should help them stay in their home, since their payments towards DAS will be calculated to leave them with enough for all their essential monthly costs – including their mortgage.

Finally, entering DAS will affect your credit rating – but it won’t have the same impact as bankruptcy. After all, if you successfully complete a DPP, it’ll mean you’ve repaid your debt in full, rather than having any of it written off. Potential lenders in the future will see that you have managed to repay what you owed, even if it took longer than originally expected.