ways to exit Debt Arrangement Scheme (DAS) early to enable varying settlement offers - Scotland only

IndyScot2020

Has anyone had any difficulties either trying to exit a Debt Arrangement Scheme (DAS) or negotiate with lenders while in a DAS? If so, you may be interested reading how to exit a DAS if you are in position to offer F & F settlements, but a third party (eg the DAS administrator) tries to lock you into staying in a DAS lasting for several years. Here's what happened to me earlier this year:

I attempted to negotiate with my former creditors (as advised elsewhere on MSE / AAD), listed on my DAS account, being in a position to offer F&F settlements after reading about CCAs and the like. However, to my surprise, only one lender was fully open to negotiating and eventually settling directly without having have it approved if you like via a third party - in my case the DAS administrator.

Capquest (Arrow Group) who were at the time included on the DAS at the time of setting it up.
(NOTE: I had wrongly assumed they had an enforceable debt - SO MAKE SURE you check CCAs FIRST before ever entering a DAS and remember the DAS administrator or money advisor will NOT do this for you!). After reaching a F & F settlement figure at a much lower amount than others listed in the DAS.

To complicate things further, Capquest did not want to negotiate with me via the DAS - in thereby making it difficult if not impossible to make offers via the - eg DAS money agent or administrator/distributor. Was told bluntly Capquest, would only deal with debtors and not third parties.

Often the DAS administrator and DAS payment distributor are not so keen on this - after all the regulations make it clear that creditors must be treated equally (eg offer same settlement amount) - however, this is difficult for debtors when you have a mixture of both unenforceable and enforceable debts where settlement offers vary between 10% and 70% AND/OR where a creditor does not want to deal with negotiations while inside the DAS.

I concluded the best thing to do was to exit the DAS and deal with the creditors individually by myself to allow myself to begin negotiations and offer each creditor different settlement amounts. But exiting the DAS - in my case a 10 year one six years early - as I was to find out was not as straightforward as leaving a traditional non statutory DMP. So...this is what I did:

First I asked the creditors would they be happy for me to exit the DAS and deal with creditors direct - ALL said yes not a problem at all.

However, this is where another problem arose, the DAS administrator who I assumed would end ('revoke') the DAS agreement. But to my surprise they refused my request and said this was not possible, I would have to stick to the 10 year term. All settlements would have to be approved by them.

Long story short - I found the ONLY WAY to exit a DAS in my circumstances was to breach the DAS condition. The condition I did not meet was the one that commits the debtor to not making additional payments to any DAS creditor without approval of the DAS administer (to prevent treating one creditor more favourable than another). So I paid Capquest (see above) out with the DAS programme. The other condition I could have broken was to miss 3 or 4 payments in a row, but I did not have the time or patience to do this.

While breaching a DAS condition does not automatically mean an end to the DAS, it is usually enough for the DAS administrator evidence to prove the DAS agreement cannot be completed thereby they can agree to close the DAS. After assessing the evidence the DAS admin will write to the creditor and debtor of the situation and usually make a determination to revoke the DAS account after a consultation with all parties (takes about 4-6 weeks).

So there you go - if you are in a rush as I was to exit the DAS and negotiate with creditors direct - rather than wait another 5 or 6 years say, just breach the conditions (at your own risk!) to allow the administrator to effectively kick you off the DAS. The DAS admin will probably urge caution if going down this route as they may say the creditors may be entitled to add interest/ charges -though I'm told in reality this rarely if ever happens at all.

Another bonus of leaving the DAS early is that your credit file may repair quicker. For a while one of the three credit agencies recorded the DAS on my credit report. This disappeared after leaving the DAS early.

Please treat this advice with caution and take time to review the DAS conditions and discuss with your money advisor before exiting the DAS. Not saying DAS is better / worse than a non statutory DMP- for some its better and may be best to stay depending on your financial situation. But if the DAS administrator or others tells you can't exit the DAS before the agreed end date - there is a way - breach the standard conditions.

After exiting the DAS, you should find as I did all the remaining DAS creditors will be able to accept F & F settlements or in the case of Bank of Scotland and some others begin negotiations to reach a F & F settlement.

I think the DAS regulations change from time to time, so do check terms of your DAS if you go down this route.

Not sure how common this issue is for people living in Scotland on a DAS, but though I'd share just in case its of some use or if other members have examples to share

Debtfighter

Thanks for sharing indyscot2020 - I am certain there are people like myself who are interested in your experience and knowledge that you have gained and shared. Like you said it is not something you definitely recommend as every one of our circumstances is different so for sure I would seek further financial advice before even considering this. Especially as a DAS does offer protection from creditors.