THE Scottish Government-backed Debt Arrangement Scheme (DAS) has helped Scots to repay £13.4 million of debt in the first six months of this year, according to new figures.
Begins a spokesperson: “It is anticipated that this figure is likely to increase in the next six months as the change in legislation made by the Scottish Government to the scheme has an effect.
“To help those who struggle with money worries, but want to pay their debt, the Scottish Government this year amended legislation which freezes all interest and charges the moment an application for a Debt Payment Plan (DPP) is made to creditors via DAS, giving households valuable breathing space.
“Over 2,000 Scots have entered the DAS scheme in the last six months.”
The spokesperson added: “Created almost a decade ago, DAS is the only Scottish Government backed debt management scheme and can consolidate debts into one manageable monthly payment.
“Administered by government agency Accountant in Bankruptcy (AiB), it freezes interest, fees and charges to prevent debts mounting up. It also stops creditors using debt enforcement action, safeguarding people’s homes so long as they keep up mortgage repayments.”
Enterprise Minister, Fergus Ewing, said: “This is a significant amount of debt which the scheme has helped people repay already this year.
“People from all parts of our society can suddenly be hit by unforeseen circumstances which push them into seemingly uncontrollable levels of debt. The world-leading action which the Scottish Government took earlier this year to freeze interest and charges upon application, demonstrates our commitment to address these problems.
“The Debt Arrangement Scheme is the only government-backed scheme available which protects those in debt and provides a dignified way for debts to be re-paid. Creditors get a good deal too with 90 per cent of what they are owed being returned to them.
“Our message is simple – there is help for those people in Scotland who are struggling under the burden of debt. By raising awareness of DAS, we hope that more people can take control of their finances and get help out of the hole.”
Rosemary Winter-Scott, chief executive of AiB, the Scottish Government agency responsible for DAS, added:
“It is encouraging to see that DAS is supporting a growing number of people in Scotland and that an increasing amount of debt is debt being repaid. This relieves pressure on individuals and hard working families and is clearly good for wider society and the economy.
“For many people, an unexpected change in personal circumstances, such as a new child or illness, can topple the scale and slide them into unmanageable debt. It is important that we remove some of the stigma associated with debt and encourage more people to seek support in order to help them tackle their debt.
“DAS is the only Scottish Government-backed scheme that offers a way for people who are in debt to regain control of their finances again. By immediately removing the burden of fees, charges and interest and agreeing a sustainable repayment programme, it enables them to tackle their debt while maintaining a level of income that will allow them to get on with their lives.”
The Debt Arrangement Scheme makes a valuable contribution to the Scottish economy by repaying a minimum of 90 per cent of debt owed to creditors.
The scheme is suitable for individuals and couples in Scotland, earning a wage with some disposable income who want to tackle their debt. DPP will contact all creditors and consolidate all the debts into one manageable monthly payment.
The length of repayment varies depending on the level of debt, but DAS does not require the release of equity on the family home if mortgage payments are maintained.
Citizen’s Advice Scotland chief executive, Margaret Lynch, added:
“One in four cases seen by a Scottish CAB at the moment is a debt case. Our advisers see people every day who took out a loan they thought they could manage, but which has now overwhelmed them.
“We see the devastating impact that debt has on these peoples’ lives; because debt is a nightmare. It doesn’t just affect your finances but your health, your relationships and your state of mind too. It can put your home at risk and can hit your credit rating for years.
“It is essential that we have viable solutions that can help people beat that misery. DAS is one effective solution that has certainly helped a lot of people. The total repayment figure reported today is heartening, and will hopefully encourage many more people who are in debt that there are ways out, and that they should come forward for advice.
“With the recession and the current welfare reforms like the bedroom tax, many families in Scotland are short of cash, and sadly there are many lenders out there who are only too keen to exploit those people, and take advantage of the fact that they feel they need to borrow.
“Many payday lenders in particular are extremely dangerous, and we are trying to get the message out to people what the dangers are, so they understand that there are always other options, and they should always shop around before taking out a high-interest loan – just as you would when buying anything else. Shop around, read the small print and get advice.
“The CAB is there to give that advice, and to help anyone who gets into debt. Our advisers are very experienced in helping people in debt. It’s one of the most common things they do now, sadly, so they are experts.
“The DAS is one route that people can take, but there are others. It all depends on your specific situation, and our advisers are experts at looking at individual cases and coming up with the right advice.
“If you are in debt the key thing is to bite the bullet and get control of it – now. I know it’s not easy to face up to your problem, but you don’t have to face it alone. Help is available.
“Contact your local CAB today and ask for a money advice appointment. It will be the best phone call you make this year, because it will be the beginning of the process of getting in control of your finances.
“If you are not in debt but thinking of taking out a loan, please think very hard, get advice, shop around and make sure you read the small print. The best way to deal with debt is to avoid it altogether! ”
There are 111 DAS advisors around the country and the Citizens Advice Bureau offer the service for free. Those who want to tackle debt are advised to find out more at www.helpoutofthehole.org to find their nearest DAS advisor.
Case study: Claire and John (names have been changed to protect identities)
As a couple who had always held down steady jobs and worked hard to pay their bills, money had never been much of an issue for Claire and John from Glasgow. But when just months away from welcoming the birth of their first child, John found out that he was to be made redundant, it soon became difficult for them to make ends meet.
Claire said: “Money was something we had never really had concerns about before as myself and John both had stable incomes but having these two major life-changing events happen within such quick succession really shook us up. Although it was difficult to face up to it soon became clear that we couldn’t survive on just one income, especially with a new baby in the picture, so we quickly made the decision that something had to be done.”
Worried about what might happen to their home and possessions if their debt continued to build, Claire and John decided to contact the Citizen’s Advice Bureau who directed them to the Debt Arrangement Scheme team at their local council.
Claire said it was the best decision that they could have made. She said: “Whilst actually seeing all of our debts laid down on paper was a real eye-opener, it was also extremely helpful to be able to talk to someone who had the specialist knowledge to guide us through our options.
“Although John and I had always been honest with each other about our financial issues, it was getting this expert advice that really helped us deal with our debt worries. I suppose we had probably taken money a bit for granted before, whereas actually getting to grips with our income and expenditure allowed us to begin to develop more of a ‘money mindset’.
“Since starting with the Debt Arrangement Scheme, we have really started to get back on our feet – it has been a real lifesaver for us.”
Claire and John are now ten months into their Debt Payment Plan and pay a manageable monthly sum to their assigned debt payment distributor who deals with the couple’s creditors on their behalf.
For Claire, joining the Debt Arrangement Scheme was a very straightforward process that has lifted a huge weight off of both her and John’s shoulders.
She continues: “The whole thing has been very simple, in fact much simpler than I ever thought it could be, and we now have real peace of mind that all our debts are being dealt with.
“We also feel much more secure in our finances and know that we’ll be able to afford our monthly repayments, without being dangerously stretched for cash. While we still have six years to go until we are debt free, it is a good feeling to know that we’re heading in the right direction.
“I would urge anyone who is worried about their finances to go and see an approved money adviser to talk through your options and get expert advice as soon as possible. These people are there to help and can make sure that you choose the best way forward to get you out of financial trouble before it’s too late.”
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Contact: Lucy Nicolson