Three things become statutory instead of voluntary: the interest freeze, the protection from diligence, and the creditors’ obligation to take part.

The two arrangements side by side

StepChange puts the plan side of that plainly: a plan is not based on Government legislation, so it does not protect you from legal action by your creditors.

The interest point is the sharpest one

Under the Debt Arrangement Scheme the freeze is automatic and statutory from the day you apply. On a debt management plan there is no freeze at all unless the creditor agrees to one.

StepChange says many creditors do stop interest. None of them has to.

And the enforcement point is the Scottish one

Section 4(2) of the Debt Arrangement and Attachment (Scotland) Act 2002 makes it incompetent to serve a charge for payment or to commence or execute diligence for a debt in an approved programme.

What is prohibited is a charge for payment and the commencing or executing of diligence. Whether a creditor may still raise an action is not settled by any source.

No. You can keep paying it while the application is prepared, because nothing about the plan blocks the application.

What actually bars an application

Regulation 21(2) bars an application where payment of a debt is being made under a conjoined arrestment order, where you are party to a protected trust deed, where you are an undischarged bankrupt, or where you are subject to bankruptcy restrictions.

None of those describes an informal arrangement with a debt management company. That is the answer, and it is worth having in one sentence.

Ending the plan is a contract question

What is binding is your contract with the provider, not the plan itself. The creditors are not parties to it.

Cancel it once the programme is approved rather than before, so there is no month where nothing is being paid. Whether you can cancel at any time covers the notice question.

Ask for the handover paperwork early

Your adviser needs every creditor, every balance and every reference number. Getting that from the provider in writing is the slowest part of the process.

An approved money adviser applies for you, and cannot charge you for doing it. That is the regulations rather than a matter of preference.

The requirement, and the fee position

You cannot apply on your own. Regulation 20(2)(a) requires the application to be made by a money adviser on the debtor’s behalf.

Since 4 November 2019 a money adviser may not charge an individual a fee for this work, under regulation 12(2) as substituted by SSI 2019/315.

Where to find one

The Accountant in Bankruptcy administers the scheme and publishes the list of approved money advisers, and Citizens Advice Scotland, StepChange, Advice Direct Scotland and council money advice teams all have them. Whether you need a money adviser explains what the role involves.

The steps in order

How to apply for a debt payment programme covers the application itself in detail, including the form and the timescales.

Not all of them. A programme for an individual is approved where creditors holding at least nine tenths of the value consent.

The threshold, and its date

That has been the test since 4 November 2019, under regulations 23(1)(a) and 24(1) as substituted by SSI 2019/315.

The test is nine tenths by value, not by number. A single creditor holding more than a tenth of the total can withhold consent and put the application to the fair and reasonable test.

Silence counts in your favour

Silence counts as consent. Regulation 23(5) deems a creditor who does not respond within 21 days of the request to have consented, irrespective of any assignation of the debt.

That rule applies only to a programme providing for the payment of more than one debt. A programme covering a single debt gets no deemed consent.

And a refusal is not the end

An objection does not end the application. Where approval cannot be given under regulation 24, regulation 25(1) requires the DAS Administrator to approve a programme that is fair and reasonable.

There is no statutory list of grounds for objecting and nothing requires a creditor to give reasons, which whether all your creditors have to agree sets out in full.

Compare that with the plan you are leaving

National Debtline’s Scottish guide says a debt management company cannot force creditors to accept offers, and that a programme under the Debt Arrangement Scheme is usually a much better option.

Interest and charges stop being owed, and an arrestment of your income or property is recalled. Neither of those is something a plan could ever do.

Interest, by force of the scheme

Interest, fees, penalties and other charges stop being owed on the debts in an approved programme, under the Debt Arrangement Scheme (Interest, Fees, Penalties and Other Charges) (Scotland) Regulations 2011.

On a plan there is no such rule at all, and whether a plan freezes interest sets out what the Financial Conduct Authority does and does not require.

The recall, which nobody else writes about

Regulation 33(1)(a) recalls any arrestment of your income or property on approval, and notice of the recall goes to the employer or to whoever holds the arrested funds.

Since 29 October 2018 the continuing money adviser sends that notice, or the DAS Administrator where there is no continuing money adviser.

That is the single largest practical difference for anyone with a deduction coming off their wages, because a plan does not touch one.

One thing is not settled

Inhibition is not named anywhere in the recall provisions, and no source settles whether one already registered is recalled on approval. Ask your money adviser what applies to yours.

Protection before approval

A statutory moratorium lasts six months. The period was six weeks until section 23(2) of the Coronavirus (Recovery and Reform) (Scotland) Act 2022 substituted six months in section 198 of the Bankruptcy (Scotland) Act 2016, with effect from 1 October 2022.

One in any twelve months, under section 195(2). It ends early if a Debt Payment Programme is approved, and it can run past six months where an application has been lodged and not yet decided.

It stops new diligence and not one already running. Section 197(5)(d) lets a creditor carry on executing an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order that was already in effect when the moratorium began.

It costs you nothing, because the fee comes out of what creditors receive. In exchange, you do not choose which debts are included.

The fee, precisely

Twenty per cent for an individual, under regulation 17(2) as substituted by SSI 2019/315 with effect from 4 November 2019.

The fee comes out of what is distributed to creditors rather than being added to your debt. Your creditors fund the scheme out of what they receive.

A payments distributor may make no charge of any kind to a debtor. You pay one figure and it is split between the creditors.

Every eligible debt goes in

You do not choose which debts go in. Regulation 20(2A) requires the programme to provide for every debt you owe at the time of the application that a programme can cover.

Rent and mortgage arrears on your sole or main residence are the exception. Regulation 20(2AA), which has applied since 29 October 2018, lets an individual leave them out rather than requiring it.

Anything left out sits outside the programme’s protection as well as outside the programme. Interest and charges on those arrears are not frozen, and diligence for them is not recalled.

What can and cannot be included

Which debts can and cannot go in goes through each category, and whether a programme freezes interest deals with what stops on approval.

Privacy and flexibility. A programme is on a public register and it is not something you can simply walk away from.

The register

The DAS Register is free to search and open to anyone, and it is kept by the Accountant in Bankruptcy.

A debt management plan appears on no register at all, which is the one thing it does better, and the DAS Register covers what an entry shows.

The credit file question is genuinely different

No credit reference agency publishes a retention rule for a Debt Arrangement Scheme. Experian, Equifax and TransUnion all publish what they hold and for how long, and none of them lists a Debt Arrangement Scheme at all.

On a plan the position is different, because the accounts inside it are consumer credit accounts being paid at less than the contractual rate, and that is reported. Whether a programme shows on your credit file deals with the other side of it.

Taking credit is restricted

An individual may take credit up to £2,000 without a variation, but not where they already owe £1,000 or more outside the programme, disregarding excluded rent and mortgage arrears on their home.

Nothing in law restricts credit while a plan runs, and nothing prescribes what a provider’s contract may say about it. Read the contract you signed, which CONC 8.4.1, a rule, requires you to have in writing.

And it is a commitment

No maximum length applies to a programme for an individual. The five-year limit that appears on some pages belongs to Business DAS.

A programme can be varied and can be revoked, but it is not walked away from in an afternoon. When to move to a statutory solution sets out when that trade is worth making.