Pros and cons of DAS

When looking at the debt solutions available you should consider all the pros and cons to ensure you are fully aware of how they may affect you. For example while a debt arrangement scheme freezes interest and charges allowing you to pay back your debts quicker, entry into this debt solution will affect your credit rating.

We’ve put together a guide of the pros and cons so you can find out more about what a DAS includes.

If you want to discuss this or any other debt solutions with a trained adviser, contact PayPlan. All our advice is FREE and our team are experienced in helping people get out of debt.

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Advantages of the Debt Arrangement Scheme (DAS)

  • It’s affordable

The debt arrangement scheme is designed to be a flexible debt solution so you pay one monthly payment that you can afford to your creditors. 

  • Frozen interest and charges

Interest rates are frozen and creditors are not allowed to add extra charges to your debts. This means your debts won’t increase while you are in a DPP and you will be able to pay off your debts quicker. 

  • Legal action is stopped

Once you have entered into your DPP, and providing you continue to follow your agreement, your creditors will not be able any legal action against you. 

  • Your assets

Normally, within a DPP your assets are not taken into consideration. Unlike other debt solutions like sequestration your home and car are protected.

  • Flexibility

If you experience a genuine change in circumstances whilst in a DPP, it may be possible to reduce your payments.  If you suffer a temporary reduction in income, it may also be possible for you to have a payment break of up to six months.

  • It’s not insolvency.

Unlike a Trust Deed, Sequestration or MAP, it is not classed as formal insolvency.

  • You have time to pay.
Unlike with most debt solutions there is not a time scale on how long you have to pay back your debts. You can take as long as you need to make your payments and while doing so you can rest assured your debt will not increase.

Disadvantages of the Debt Arrangement Scheme (DAS)

  • Credit Rating

As with all debt solutions, your credit rating will be affected and you may struggle to obtain credit. A DPP will also stay on your credit file for six years from its acceptance, or until it completes in the event that it lasts longer than six years.

  • DAS Register

Your DAS will be recorded on a public register and this will impact your credit rating. 

  • Missed payments

If you miss two payments and a third is due, it’s possible that your DPP will fail.   This is unless a payment break has been granted. This means your creditors can apply interest and charges, take legal action or even petition for your bankruptcy. 

  • Repayment term could be longer

Because you are reducing your repayments, it could take you longer to pay off your debts. 

  • No further credit

It is normally a condition of your DPP that you cannot obtain any further credit.  As your credit rating will be affected, it is also unlikely that you will be able to obtain credit without paying a higher than average interest rate.

  • Debts taken out after DPP

Only debts that were included in the original DPP would be discharged at the end of the DPP, so if you had taken out any further debts these won’t be included and you’d still have to repay them.

  • Limited Debt write-off

You can apply for debt write-off if you have been in a DPP for 12 years and paid back 70% of your debts.  However compared with a Trust Deed, Sequestration or MAP, the write off time is a lot longer.