Debt Arrangement Scheme and DMP Comparison. StepChange (2024)

FAQs

What is the difference between debt arrangement scheme and debt management plan? ›

It lowers your monthly repayments to an affordable level, and is legally-binding for you and your creditors although there is some flexibility built-in. The other option, a Debt Management Plan (DMP), has a similar structure to DAS but it is an informal arrangement.

With a DAS, your payments are set by a money advisor and will always be based on your income and expenditure and consolidated to an amount you can comfortably afford. With a DMP, however, your monthly payments will only be consolidated if you go through a debt solution provider.

Legal: A DRO is a legally binding solution, meaning your creditors can not act against you while this is ongoing. A DMP is informal, so you or your creditors are not obliged to stick to it, and you have less protection. Interest and charges: On a DRO, your interest and charges are frozen whilst this is ongoing.

StepChange is a charity and provides free debt management plans. Find out more about how debt management companies work. You may be able to apply for Breathing Space while you set up your DMP.

The Debt Arrangement Scheme (DAS) lets you pay off your debts at rate you can afford. DAS also gives you protection from creditors. It's run by a part of the Scottish Government called Accountant in Bankruptcy (AiB).

Yes – creditors are under no obligation to accept your DMP. They might do this if they don't want to accept reduced payments or feel you could afford to pay more. If they refuse to negotiate with your DMP provider, it can be worth negotiating with them yourself. Outline what you can afford to pay each month and why.

A DMP may be a good option if the following apply to you: you can afford your living costs and have a way to deal with any priority debts, but you're struggling to keep up with your credit cards and loans. you'd like someone to deal with your creditors for you. making one set monthly payment will help you to budget.

Length – Trust Deeds last for 4 years. After this time, any remaining unaffordable debt is paid off. With the Debt Arrangement Scheme, they last until all your debt is repaid, this can be up to 12 years.

What debts Cannot be included in a DRO? ›

Debts not covered by a DRO

child support and maintenance. student loans. social fund loans.

PayPlan don't charge any fees for setting up or managing your debt management plans as we are funded by the credit industry, so 100% of the money you pay goes towards repaying your debts.

If there's a chance in my budget (like increased rent etc.) then I can easily do the budget review online, and StepChange will automatically adjust the monthly instalments to my new budget. Highly recommended! Please, if you're struggling with your debts, do not wait any longer and reach for help!"

Get debt advice to make sure this is your best option. Most debt management companies charge for DMPs. StepChange offer DMPs for free.

Your DMP can be changed at any time based on your needs. Don't worry, your creditors know that things will change from time to time. If you do not have a review, we cannot be sure a DMP is right for you. We may have to cancel your DMP if you miss reviews regularly.

One of the main differences between an IVA and a DMP is the fact that an IVA is legally binding, whereas a DMP isn't. Once you've entered into an IVA, your creditors can't take legal action against you or contact you directly. All contact must be made through an Insolvency Practitioner or a debt management company.

While debt management plans can be effective tools for repaying your debt, they're not always the best strategy. For example, secured debts and student loans aren't eligible for debt management plans, and credit counseling agencies may cap how much debt you can have to participate.

Debts that cannot be included in a debt management plan (DMP) are those that are considered 'priority debts' such as mortgages and secured loans, student loans, court fines, and child support payments.