Pay off debt, save your assets, and avoid insolvency
Debt Arrangement Scheme
Are you a sole trader or director of an SME with personal liability? Or perhaps you have experienced an income drop due to Covid-19 restrictions, and need help managing debts.
If so, a DAS with Libra will allow you to pay your creditors in full over a time span that suits your income. Assets are not considered, and, as creditors are paid in full, you will not appear on the register of insolvencies. Read on to find out more and contact us here to start the process today.
What is a DAS?
A statutory debt management programme introduced by the Scottish Government; a DAS allows you pay your creditors over a time frame that suits you. The average duration of a DAS is 5 years. Our longest is 11 years, and our shortest 3.
Assets are not taken into account, so houses and cars are unaffected. You pay back the full amount due to creditors based on balances owed when the DAS is effective, and any subsequent interest and charges which would otherwise be payable are frozen. Repayments are typically monthly from income.
DAS is not categorised as an insolvency process. You will not appear on the register of insolvencies, though in a DAS would flag up in your credit report.
A discretionary condition allows planned lump sums to be paid later in the DAS. Examples of discretionary conditions we have dealt with for the introduction of funds are: house sales; pension draw-downs; or divorce settlements.
Fair and Reasonable Test
Creditors do have the scope to object to a DAS proposal, in which case it goes to a “fair and reasonable test” with the Scottish Government’s “Accountant in Bankruptcy” office. That office will decide whether to uphold the DAS despite the wishes of creditors. As yet, we have had no
clients put forward for the fair and reasonable test with the Accountant in Bankruptcy not have their DAS upheld.
It is essential that you can make a reasonable forecast of your financial affairs to formulate a DAS proposal. For some clients, with the continuing changes in national and local lockdown restrictions, that kind of medium-term financial prediction cannot be made. As part of a suite of emergency legislation introduced by the Scottish Government to support individuals in financial crisis in the face of the pandemic, the moratorium available to individuals to protect against creditor action was extended from 6 weeks to 6 months.
This gives you breathing space to “sit it out” for a period until future prospects are clearer. A more informed and less reactionary decision can then be taken as to whether:
- Is any rescheduling of debts required at all?
- Would a DAS be a constructive solution?
- Could there be a future tangible injection of funds or increase in monthly payments which would make a DAS with associated “discretionary conditions” viable?
- Can informal arrangements be made with creditors?
- Are the circumstances such that only a form of Bankruptcy is appropriate?
You can apply for the moratorium on your own, however we are happy to assist to do this on your behalf, free of charge.