A Debt Payment Programme starts from the opposite position, which is why it matters to anyone with money already coming out of their wages.

Here is what the scheme actually asks of you, what it bars, and how it lines up against the insolvency routes.

Residence in Scotland, at least one debt, enough surplus income to make a payment, and an approved money adviser to make the application. Insolvency is not on the list.

The conditions, in one place

Surplus income is the real test

What the scheme needs is money left after essential living costs, assessed with the Common Financial Tool. No minimum figure appears anywhere in the regulations or in the official guidance.

Since 29 October 2018 you may propose a proportion of your surplus rather than the whole of it. Our Debt Arrangement Scheme page sets out how the scheme works in practice.

You cannot do it yourself

Regulation 7 is headed so that the debtor is to have an approved money adviser, and regulation 20(2)(a) requires the application to be made by that adviser on form 1. That is a genuine difference from an informal English debt management plan.

The adviser does not have to be someone you pay. Whether you should use a free debt charity or a paid debt adviser sets out who can be approved and what the fee rules are.

How the payment figure is worked out

The adviser uses the Common Financial Tool to assess your surplus, which is the same assessment used in bankruptcy and trust deeds. The scheme then modifies it, because in DAS you may propose a proportion of that surplus.

The first payment is due within 42 days of approval, under regulation 27(2)(a) as amended with effect from 2 July 2013. Payment can be by mandate to an employer, direct debit or standing order, a payment card or key, or electronic banking.

Because you repay the debt in full, no trustee takes charge of your estate, and nothing goes on the Register of Insolvencies. What is written off at the end is the interest and charges, not the principal.

What insolvency involves and a programme does not

In a trust deed or a sequestration a trustee takes control of the estate, deals with assets and contributions, and then seeks discharge. A programme leaves you in control of your own affairs.

The two are recorded in different places as well. What is a protected trust deed and what is sequestration in Scotland cover the insolvency side.

Two registers, not one

A programme appears on the DAS Register, which the Accountant in Bankruptcy runs under regulations 18 and 19 of the 2011 Regulations. Sequestrations and protected trust deeds appear on the Register of Insolvencies, under section 200 of the Bankruptcy (Scotland) Act 2016.

So a DAS entry does not mark you as bankrupt. Whether a Debt Arrangement Scheme shows on your credit file deals with what a lender sees.

Neither. Regulation 21(1) says a debtor may apply where the programme provides for the payment of one or more debts, and it puts no figure on either side.

One creditor is enough

A single-debt programme is competent. There is one consequence to know about, because deemed consent under regulation 23(5) only operates where the programme covers more than one debt.

Where a sole creditor does not reply within 21 days, the application goes to the fair and reasonable test instead of being deemed consented to. That is a difference in route, not a refusal.

Approval is not at the creditors’ discretion

Where creditors representing not less than nine tenths in value consent, regulation 24(1) makes approval automatic. Where they do not, regulation 25(1) says the DAS Administrator must approve a programme that is fair and reasonable.

Objection is therefore not a veto. Whether council tax arrears can go into a Debt Arrangement Scheme covers how a council is treated as a creditor like any other.

Regulation 21(2) sets out the bars, and they are about other formal positions rather than about your finances. A conjoined arrestment order, a protected trust deed and an undischarged bankruptcy are the main ones.

The list

• Being subject to a conjoined arrestment order, subject to the exception in regulation 21(4).
• Being party to a protected trust deed, or sequestrated and not yet discharged.
• Being subject to a bankruptcy restrictions order or undertaking.
• For a single-debt programme only, already being subject to a time to pay direction, a time to pay order or a Consumer Credit Act time order for that debt, under regulation 21(3).

Joint applications

Regulation 22(1) lets two people apply together where they are jointly and severally liable for at least one debt in the programme. They must also be married, civil partners, or living together as if married.

None of those bars is about affordability

Read the list again and notice what is missing. Nothing there turns on the size of the debt, the state of your balance sheet or whether your assets exceed your liabilities.

What can happen later is revocation, where two payments fall into arrears or a condition of the programme is broken. What happens if you break a council tax payment arrangement covers the equivalent risk on an informal arrangement.

The scheme repays everything and writes off nothing but the frozen interest and charges. The insolvency routes write off what is left at the end, and put a trustee in charge to get there.

The four routes side by side

Nobody should pick between these alone, because the trade-offs run through your home, your job and your credit file. Which debt solution is best if you have a wage arrestment sets out how the choice is usually made.

What goes into a programme

The council tax line catches people out more than any other. Putting last year’s arrears into a programme does not pause this year’s instalments.

Yes, on approval. Regulation 33(1)(a) gives approval the effect of a recall of any arrestment of your income or property, and the Accountant in Bankruptcy sends the notice to your employer.

The creditor does not have to act

That is worth knowing, because an old arrestment does not need the creditor’s co-operation to come off. Whether a Debt Arrangement Scheme stops a wage arrestment goes through the mechanics.

Section 4(2) of the Debt Arrangement and Attachment (Scotland) Act 2002 then makes it incompetent to serve a charge for payment or to commence or execute any diligence. Section 4(3) stops a creditor founding on the debt in a sequestration petition.

The gap before approval

Approval is the trigger, so deductions carry on while the application is being prepared and considered. Advisers often run a statutory moratorium alongside, to block new diligence in the meantime.

A statutory moratorium is the exception. It does not stop an earnings arrestment that was already running: section 197(5)(d) of the Bankruptcy (Scotland) Act 2016 lets a creditor carry on executing an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order that came into effect before the moratorium began.

So the moratorium covers a new diligence rather than one already running, and how a statutory moratorium protects you covers the six months. Applications go through the Accountant in Bankruptcy.

Money deducted before approval is credited against the debt rather than refunded. What happens to money already taken when a wage arrestment stops covers that.

Nothing to you. The scheme’s fees come out of what creditors recover, and the length follows your affordability rather than a statutory maximum.

Who pays the 22%

The DAS Administrator’s fee is 2% of each sum distributed to a creditor, and regulation 5 says it may not be charged to the debtor. The payments distributor’s fee for an individual is 20%, set by SSI 2019/315 with effect from 4 November 2019.

Regulation 17(1)(a) says a payments distributor must make no charge of any kind to a debtor. On applications made from 4 November 2019, creditors receive 78% of the debt when a programme completes.

How long

There is no statutory maximum length. The Accountant in Bankruptcy puts the average programme at around six years, and how long a Debt Payment Programme lasts sets out the detail.

Length is one of the factors in the fair and reasonable test rather than a ceiling. Citizens Advice Scotland’s practical steer is that more than ten years might be unlikely to be reasonable unless every creditor is content.

Before you commit

• Check the monthly figure against a full budget, including the current year’s council tax.
• Ask what happens if your income falls, because a programme can be varied and there is a payment break where disposable income drops by half.
• Ask how the programme will be reported to credit reference agencies.
• Get the comparison with a trust deed or sequestration in writing before deciding.