This advice is applicable in Scotland only
For those living in Scotland, there’s a host of different debt solutions available that aren’t in England and Wales. But with choice comes a lot of responsibility and it can be a bit of a minefield sorting through all the information out there.
So to help you out here’s our guide to the seven biggest differences between two Scottish debt solutions that are often compared: DMPs and DPPs under the Debt Arrangement Scheme (DAS).
1. Formal vs. informal debt solutions
A debt payment programme (DPP) is run under a scheme called the Debt Arrangement Scheme. This is run by the Scottish Government and has been part of Scottish law since 2004. A debt management plan (DMP) is an informal arrangement and as it isn’t run by government or set down in law it’s much more informal than a DPP.
2. Interest and charges on DPP and DMP
If you set up a DPP your interest and charges are frozen, so the amount you owe won’t increase. On a DMP your creditors are still allowed to add interest and charges to your debt if they want to.
3. Contact from creditors
If you set up a DPP your creditors can’t contact you, so you won’t get any more letters or phone calls from them. On a DMP your creditors can continue to contact you, and you’ll normally get letters, phone calls and emails from them, especially in the first few months. If you’re worried about this you can read our information on what your creditors can actually do.
4. Recording your details
If you enter into a DPP your details will be put on the DAS register, an online database that anyone can access. A DMP isn’t recorded on any publicly-accessible database or register.
5. Home owners
If you own a property this will be protected under a DPP. If you’re on a DMP your creditors could apply for an inhibition order which would attach the debt to your home.
6. Setting up the solution
Your creditors have to approve your DPP. If they don’t agree with your DPP it would be up to Accountant In Bankruptcy (who are the administrators for the Debt Arrangement Schemes) to decide whether or not your DPP can go ahead. With a DMP your creditors don’t have a say; they have to credit the payment to your account, regardless of whether or not they’re happy with it.
7. Finishing your payments
A DPP has a fixed end date, and unless you take a payment break or reduce your payment you’ll know exactly when your payments will finish. Because your creditors might add interest and charges onto your debts there isn’t a fixed end date to a DMP.
Similarities with DPP and DMPs
One of the similarities between these two solutions is that your credit history will be affected for six years.
It also takes some time to arrange either of these payment plans and theres’s a chance that arrears will accumulate on your account while things are being set up.
Get advice before deciding on your debt solution
If you’re still not sure which solution would be best for you use our online Debt Remedy tool. This’ll help you create a personalised budget and recommend the solutions that are best suited to your situation. We’ll also give you a personal action plan packed with everything you could want to know about the solutions we’ve recommended.