debt arrangement scheme

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I made up my mind to look into a DAS a few weeks a ago and made an appointment wth a Money Advisor. My home has a lot of equity and it seemed the best solution to protect that.

I owe about £80k which came mainly from my business which failed last year.

Went through a SOA with the Money Advisor which would see me settle my debts over 8 years so the Money Advisor wrote to each of my creditors advising them of my intentions and requested confirmation of the amount owed.

One creditor has already written back to object - even though I haven't put forward a proposal yet!! This means my proposal will need to be assessed by the DAS Administrator whether it is fair and reasonable.

From what my Money Advisor said any DAS less than 5yrs is normally seen as fair and reasonable and the gets the administrator's approval. A DAS of between 5 & 10 years is less certain and is subject to more scrutiny. A DAS can also go beyond 10yrs provided the creditors agree.

Has anyone had a similar experience and perhaps let me know what to expect? The creditor that has objected has a decree against me for the amount owed so their next step is to seek my sequistration - I am protected from this at the moment but I am concerned about what will happen if my DAS application fails.

thanks
:shocked: Debt @ January '10 =£79712 :shocked:



:dance: Debt @ November 2015 =£00000 :dance:
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Comments

  • coolcait
    coolcait Posts: 4,803 Forumite
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    Hiya, billy

    I'm not entirely sure that a creditor's objection at this stage would count :confused:. That might be one for your money adviser to run past the DAS Administrator.

    AIUI, once the money adviser has the details of all the debts, he/she sends a formal offer (Form 4?) to all the creditors. They have 21 dyas to respond. They can consent, withhold consent, or fail to reply (deemed as consent).

    If all creditors consent, the DAS) is approved automatically. If any creditor doesn't consent (at that stage) then the DAS Administrator decides.

    There is a list of things that they look at is assessing 'fair and reasonable', but the two biggies are the length of the programme, and the percentage of non-consent. What percentage of your total debt is owed to the objecting creditor?

    The DAS Administrator also has to take into account the comments made by the creditors, and the money adviser.

    HTH
  • billybraggtastic
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    Thanks for taking the time to respond coolcait.

    The company that has already intimated their objection make up about 12.5% of my debt. I suspect though that there will be other objections - half my debt is with businesses and half is with bank/credit cards.

    The DAS proposal is going out today and I am proposing to pay £851.36 for 93 months (just short of eight years!!!). The next 21 days will be nervous.
    :shocked: Debt @ January '10 =£79712 :shocked:



    :dance: Debt @ November 2015 =£00000 :dance:
  • billybraggtastic
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    coolcait - I saw you mention in a response on another thread about protection of a family home in bankruptcy. Could you point me in the direction of information on this?

    cheers

    bbt
    :shocked: Debt @ January '10 =£79712 :shocked:



    :dance: Debt @ November 2015 =£00000 :dance:
  • coolcait
    coolcait Posts: 4,803 Forumite
    First Anniversary Combo Breaker Rampant Recycler
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    Hiya billy

    I think my reply on the other thread might have been a bit too brief. A family home still counts as an asset in a bankruptcy, so it could be sold off. The 'protection' is that the trustee can't just sell it willy nilly, whether you agree or not. If you didn't agree to selling it, he'd have to go to court to get legal approval to evict you and sell it. The Sheriff could refuse to allow this (which is rare) or agree to selling the house, but give you a year's grace to allow you to find somewhere else.

    Under existing Trust Deed regulations, those limited protections aren't included, AIUI. That's one of the reasons why the Scottish government is looking at changing legislation so that the same protections are available under both bankruptcy and trust deed legislation (if I've read the blurbs correctly).

    DAS will protect the family home from any action by creditors.

    HTH, and that it's a bit clearer than before.

    P.S. I'll try to track down the relevant links for you.
  • billybraggtastic
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    Well that is my 21days up and as anticipated one creditor has objected. Apparently their response simply argues that my proposal is not fair and reasonable in accordance with the 2004 legislation.

    I am meeting with my money advisor today to submit my proposal to a DAS Administrator who will determine whether it is fair and reasonable.

    My money advisor has been non-committal regarding my chances of success but has stated that it does not seem unreasonable to him.

    Will have a better idea after the meeting and hopefully more of an insight into what I can expect to happen next.
    :shocked: Debt @ January '10 =£79712 :shocked:



    :dance: Debt @ November 2015 =£00000 :dance:
  • Sososad
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    Hi Billy

    Just wanted to say best of luck and hope all goes well!!. Do come back and let us know how you get on.

    Sss x
    Payment 7 of 102 :eek:
  • billybraggtastic
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    So I had my meeting with my Money Advisor yesterday and my DAS application has been submitted.

    I was able to see who had consented (38% of debt) informal consents which were those who didn't respond (49% of debt) and non-consents (13% of debt)

    The DAS application had a small section where I was allowed to offer reasons why I found myself in the situation I am in and to counter the non-consent.

    Basically, business failed and personal guarantees have come back to bite me on the bum! Argued my proposal is fair and reasonable and pointed out that creditor also had a concurrent claim against my former company which could lead to some form of recovery of monies owed in the future.

    One thing that developed over this meeting was details of my home ie outstanding mortgage, equity and ownership. It would seem that the DAS Administrator may take some account of this when forming their decision. This is a little worrying because before setting off down the DAS route I had explored the possibility of a remortgage to pay off my debts. In the current financial climate no-one would touch me :eek:

    Lastly, my Money Advisor couldn't really give me a confirmed timescale for the DAS Administrator to assess my application so it looks like I will remain in limbo for a week or more yet :confused:

    chowfurnow

    BBT
    :shocked: Debt @ January '10 =£79712 :shocked:



    :dance: Debt @ November 2015 =£00000 :dance:
  • Miss_Poohs
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    Hi Billy - I wish you the best of luck with your DAS.

    My husband has one - 13 yrs long!! He's 18 months into it.

    He pays just over £500 per month, which can be a bit of a struggle of each month, but like you we have a fair amount of equity in our home and a young son, so the DAS seemed the best way to go.

    Good luck - hang in there.
    Don't try to keep up with the Joneses - Drag them down to your level - it's cheaper . :p:D
  • Cosmos1238
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    I have read with interest your conversations regarding your DAS with Money Advisor.

    My concerns of any Debt Management Scheme's it seems that you pay over a longer length of time to pay off your debt in full and I am unsure if DAS truly protects your home. Also, 8 years appear to be a very long time in your case especially paying at the level that you are.

    Have you considered going into an IVA instead? An IVA would be most likely be over 5 yrs with the view of remortgaging your property in the 4th yr of the IVA. Yes, the appointed Nominee/Supervisor would take their fees from the "pot of monthly contributions" but they most likely be restricted in their fees by the voting creditors.

    If the majority of creditors (over 75% in value) vote in favour, the proposal is accepted. However, the Nominee has the right to challenge any creditors that vote to reject should it have an affect on the voting process to have the IVA approved.

    Overall you most likely find your creditors would accept your IVA as opposed to a DAS as they will get their monies quicker, and thus would accept a much lower dividend as proposed under a DAS. For an example under your DAS you are offering to pay back 100p in the £, whereas under an IVA you may only have to pay back an estimated 70p in the £. The remaining debt gets written off at the end of the IVA should the IVA completes satisfactory.

    I noted that you have mentioned you have a large amount of equity in your property but at present unable to remortgage due to the recent recession. The other option available to you under an IVA that you could offer creditors a lump sum from the remortgage of your property within 2 years but in the meantime contribute towards the IVA on a monthly basis until such time. Therefore your IVA would be only for 2 years, and you will be debt free thereafter. Something to consider perhaps??

    I would consider talking to a reputable IP what options would be available to you under an IVA. People like Grant Thornton and KPMG are always good people to talk to as they normally vote on behalf of other creditors and so they would know what creditors would be looking for in return for their outstanding debt. Also, talk to the Insolvency Helpline - they have a website which is very informative and may give some idea which direction you would like to take if the proposal with DAS fails again.

    I wish you the very best of luck and hope everthing goes well for you.
  • coolcait
    coolcait Posts: 4,803 Forumite
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    Hiya cosmos

    Billy is in Scotland, and the Debt Arrangement Scheme is a (dare I say it) "little known piece of (Scottish) government legislation ;).

    It does protect your house; your creditors cannot legally ask you to pay more than you have undertaken to pay through the DAS; they must, by law, freeze all interest, fees and charges, and write them off when the DAS is completed. The mechanics are similar to those of a debt management plan, but DAS gives you legal protection which does not exist with an ordinary DMP.

    The IVA 'equivalent' in Scotland would be a Trust Deed. Like an IVA it is a form of insolvency, whereas DAS is not.

    If someone signs a Trust Deed, the equity in their home would be assessed, and they would be expected to pay that amount into their Trust Deed at some stage. If there is a lot of equity involved, it might be that the person ends up paying out as much as they would have to pay out over the term of a DAS. Especially if they are also paying a contribution (which might not be too dissimilar to the amount they would pay towards a DAS).

    If they were unable to buy out the Trustee's interest in the equity, the Trustee in the Trust Deed would have the right to sell the house. The Trustee would also have the right to make the person bankrupt if he or she did not keep to the terms of the Trust Deed.

    At the begining of the process, creditors have a period of five weeks to object to the Trust Deed. If sufficient objections are received, then the Trust Deed will not become protected. This counts as evidence of 'apparent insolvency', which can be used as a reason for bankruptcy.

    So, there are a number of potential down sides to Trust Deeds as well as the more positive picture you paint. Another positive might be that Trust Deeds usually last for three years, as opposed to five years for an IVA.

    However, everyine has to weigh up the pros and cons of all the options available to them. In Billy's case, having taken advice, he has decided that DAS is better for him.

    It's also worth poiting out that Billy's DAS proposal has not yet failed even once - it has only just been submitted for consideration by the DAS Administrator.

    In many ways, it's a whole different world up here when it comes to the laws on dealing with debt! But, from what Billy has told us so far, I think he has received excellent advice based on what the Scottish system offers and allows.

    HTH
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