In Focus Consumer Credit Setting the pace
The Debt Arrangement Scheme in Scotland has advantages, but could also be reformed
Dawn Stobart Director of external affairs, Christians Against Poverty
dawnstobart@capuk.org
In our experience, the weight of debt can cripple a household. Persistent telephone calls, bills on the doorstep, and also enforcement agents knocking, provide a constant reminder of the heavy burden debt bears. But what if families could be given some
space, with time to sort out finances and start a reasonable repayment plan? In Scotland, they already can. The Debt
Arrangement Scheme (DAS) is pioneering in its statutory protections, providing a breathing space for people in debt. DAS was originally established in 2004
and has been offering protection to those in debt ever since.
The need for reform Although DAS has been advantageous for many, it is limited in its effectiveness because it is inflexible and creates certain unintended, but significant, consequences. The number of applications has been
falling, with only roughly 500 applications approved each quarter. The Accountant in Bankruptcy (AiB), the DAS administrator appointed by the government, recently acknowledged that changes were needed. In a recent review, they reaffirmed their
commitment to ensuring that debt solutions are fit for purpose and stated their aims of improving accessibility, sustainability, and flexibility.
New legislation changes made in 2014 requires all debts to be included in a DPP, which can cause problems for clients in certain circumstances
One of the main challenges is the central
distributer model and the limited three-way communication this involves. Clients need to be capable of managing
correspondence from their creditors and resolving any issues themselves. Currently, if a Debt Payment Programme
(DPP) fails, interest and charges that had been halted are added retrospectively. New legislation changes made in 2014
require all debts to be included in a DPP, which can cause problems for clients in certain circumstances.
Accessibility There are several recommendations that we would make to the scheme: l Remove the requirement to include all debts in a DPP – this requirement has been in place since 2014, yet this rule is not always in the debtor’s best interest. For those with debts to family or friends
and those with rent arrears, DAS cannot always provide protection from indirect enforcement action. This requirement undermines the protections offered by DAS and reduces take-up. The AiB do intend to introduce
flexibility with regards to the inclusion of rent and mortgage
November 2017
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