DAS or bankruptcy (sequestration) - which is better?

7 July2011

There's plenty of help out there for tackling unmanageable debts - but with so many different solutions available, how can you be sure you're on the right track?

Two debt solutions available to Scottish residents are the Debt Arrangement Scheme (DAS) and bankruptcy (also known as sequestration). These solutions both help with unmanageable debts, but they are still designed to help with very different sets of circumstances. It's not fair to say that either is 'better' - it's a case of which is more appropriate for you.

You should always discuss your options with an expert debt adviser before you make any firm commitments. In the meantime, here's an introduction to DAS and bankruptcy to give you an idea of what they involve.

Debt Arrangement Scheme (DAS)

DAS is a scheme put in place by the Scottish government to help people with unmanageable debts repay what they owe in affordable monthly payments.

Under the Debt Arrangement Scheme, an approved Money Adviser can help you put together a debt payment programme (DPP). This is essentially a formalised debt management plan: a legally binding plan for affordable monthly payments towards your unsecured debts.

A DPP normally has to be agreed by all lenders covered by the agreement, but in some cases the DAS administrator may approve your case even if your lenders have declined (if they believe there is a strong enough case for doing so).

To qualify, you must be based in Scotland and have two or more unaffordable unsecured debts. You must still be able to commit to regular monthly payments.


Bankruptcy is only available to people who really can't afford to repay their debts in full within a reasonable period of time. It essentially involves handing over your 'estate' (including your home, if you're a homeowner, and sometimes other valuable assets) to a 'trustee', who administers your bankruptcy.

They can sell all / some of your assets to cover the cost of the bankruptcy itself and to repay as much of your debts as possible. At the end of the process, any remaining unpaid unsecured debts are written off.

Bankruptcy is often considered a last resort for dealing with unmanageable debts - but in some cases, it is the most appropriate option.

Consider the drawbacks

It's also important that you think about the consequences of entering into any debt solution. Aside from those we've already covered (i.e. the possibility of losing your home), you should also remember that both debt solutions will significantly affect your credit rating.

A debt adviser can talk you through all the details of each solution and explain the consequences you might face, to help ensure you're making the right decision.

And remember: all debt solutions come with their downsides, but if you really need help dealing with your debts, then you may consider the downsides a worthwhile 'price' to pay.

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Tags: debt, debt arrangement, scheme, DAS, Scotland, debt Scotland, bankruptcy, sequestration

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