DAS vs Trust Deeds
When our customers ask us about the debt solutions available, they often ask what the difference between them all is.
To clarify this, we thought we’d put together a handy comparison guide between Trust Deeds and the Debt Arrangement Scheme (DAS), so you can see some of the key differences for yourself.
|Duration||Normally continues until the debts are repaid in full – however it may be possible to look at debt write-off after 12 years in a DAS||4-5 years|
|Assets||Protected||Assets may be realised|
|Interest/charges||Guaranteed to be frozen||Guaranteed to be frozen|
|Creditor contact||Creditors cannot take legal action||Creditors cannot take legal action|
|Credit Rating||Stays on credit file for minimum of 6 years, or until the DAS has ended – whichever is the later||Stays on credit file for 6 years from the date the Trust Deed is accepted, or until Trust Deed ends – whichever is the later|
|Debt write-off||Debt write-off may be possible, but only after 12 years in a DAS||Debts are written off when the Trust Deed ends|
|Public Register||DAS is listed on a public register||Trust Deeds are listed on a public register|
|Windfalls||Do not need to be paid in. However, if they are paid in, it will reduce the length of the DAS.||Must be declared and must normally be paid into the Trust Deed|
Length of solution
One of the key differences between these two debt solutions is the length of time they last.
Trust Deeds normally last for between four and five years; however a DAS will last until all your unsecured debts have been repaid in full.
On the other hand, if you opt for DAS and the period taken to repay your debts exceeds 12 years, you could ask your creditors to consider writing off the rest of your debts after that time. But this option is only normally available if you have paid into your DAS for at least 12 years and repaid at least 70% of your original debt.
A DAS could be shorter than five years, but this depends on the total amount you owe, and how much you can afford to pay back each month. In most cases, a Trust Deed will run over a shorter time period than a DAS.
Protecting your assets
Your assets are usually protected from creditor action in both a Trust Deed and in a DAS, as both solutions protect you from legal action by your unsecured creditors.
In a Trust Deed, you will need to disclose all your assets to your unsecured creditors. In a DAS, you will also need to disclose all your assets to your money adviser.
However, the creditors in a Trust Deed may expect the Trustee to realise any assets of value and pay the funds into the Trust Deed – or compensate them financially if you do not wish to realise these assets. They will usually not expect you to do this in a DAS.
If a Trust Deed is accepted by your creditors, they are legally obliged to freeze interest and charges on your debts. They also have to do this in a DAS.
If a Trust Deed or DAS fails, it is worth noting that creditors can re-apply the interest and charges to your debts.
A Trust Deed stays on your credit reference file for six years from the date you signed your Trust Deed, or longer if it lasts for more than six years. A DAS will stay on your credit file until the debts are fully repaid, or for six years – whichever is the longer.
In both solutions, this will make obtaining credit very difficult, even if you are only interested in re-mortgaging due to your fixed rate ending in the next few years.
Windfalls – e.g. lottery wins, inheritance, salary bonuses
If you receive any windfalls during your Trust Deed such as a lottery win or an inheritance, you will be expected to declare this and pay it into your Trust Deed.
There is no such requirement in a DAS – however if you do pay any windfalls into your DAS, it will obviously reduce your payment term.
Which one is a better solution?
DAS and Trust Deeds are both good debt solutions that can protect you from legal action – and freeze interest & charges – while you repay your debts at a rate which you can afford.
DAS may be seen as more flexible than a Trust Deed, because you don’t have to pay in windfalls, and you can make the payments over an extended time period if need be. But a Trust Deed is often a quicker debt solution, as it can involve a large amount of debt write-off.
If you’re in debt, struggling to make ends meet, and unsure of your options, get in touch with PayPlan.
Our advice is 100% free, and completely confidential. We can talk you through all the debt solutions available, and help you find the right one for you.