Misunderstanding of Debt Arrangement Scheme could be causing stress for consumers in Scotland

• We see cases where financial firms don’t always recognise the Debt Arrangement Scheme (DAS) or act accordingly 
• We explain the kind of cases we see and how we can help consumers in Scotland

The Debt Arrangement Scheme (DAS) let consumers pay off their debts through a Debt Payment Programme (DPP) at a rate they can afford and gives them protection from creditors. It’s run by a part of the Scottish Government called Accountant in Bankruptcy.

The scheme covers debts in relation to most unsecured debts, including personal loans, payday loans and credit cards. Arrears of mortgages can also be included. During the DPP, all interest and charges on the debt are effectively frozen and written off on completion. Creditors can’t pursue consumers for payments for the duration of the DPP.

Over the years, we have seen cases where providers have not understood the scheme and incorrectly applied penalties.

These complaints include:

• Firms not fairly or accurately reflecting the agreement on credit files.
• Repayments made through the Debt Arrangement Scheme incorrectly presented to credit reference agencies.
• Accounts not being closed once the Debt Arrangement Scheme comes to an end. 

Viv Kelly, Ombudsman Director said:

Financial difficulties and debt can be overwhelming, affecting not just a person’s finances but also their well-being and relationships. Every case that comes to our service represents a real-life person.

This Debt Awareness Week, we want to ensure that consumers in Scotland are aware of their rights and know that there is support available. We are committed to ensuring that people receive a fair and free answer should their complaint not be fully addressed.”

Consumers in Scotland can approach us for help if they feel a firm hasn’t handled their Debt Arrangement Scheme appropriately.

We handle many kind of complaints in relation to debt. We have seen cases where people miss opportunities to engage with relevant parties before the debt collection process escalates, or complaints where people claim they have been harassed during the debt collection process.

On the other hand, we have also seen positive behaviours from firms – with some businesses taking steps to protect consumers from unmanageable debt, such as signposting them to relevant support agencies.

This Debt Awareness Week, we want consumers in Scotland to be aware that:

• There is help available: Navigating unmanageable debt can be scary but there are many organisations and charities across Scotland and the UK who can offer support and advice.
• Dialogue with financial providers is important: At the first sign of trouble or worry, it’s vital that consumers speak to their creditors. They should mention any potential issues they’re facing that may impact on their financial situation.
• We might be able to help: If consumers aren’t happy with their credit provider’s response, they can contact us for free.