I know what it feels like to have debt and I also know just how amazing that feeling is when you finally pay it back so if you’re struggling with debt then I genuinely urge you to do everything in your power to get out of it. There are options available that you might now even be aware of, such as a Debt Arrangement Scheme.
What is a Debt Arrangement Scheme
It is an agreement you enter to pay back the creditor in full. The aim is you cut down your instalments to something you can afford. This lets you catch up without disrupting your life just because you need to pay off a debt. The core difference between a DMP and DAS is explained below:
- Debt Management Plan: A DMP is an informal arrangement you enter with your creditor. It is overseen by the case administrator who works for a debt advise institute.
- Debt Arrangement Scheme: It is a formal agreement, which is legally binding. In DAS, you must go through Approved Money Advisor to get set up; When you set up a Debt Program (DPP) for DAS, the credit doesn’t contact you anymore.
What Do Authorities Say About Debt Management Plans?
According to Financial Authorities, Debt Management Plans don’t offer people what they need to recover from debt. We are not saying that DMPs are useless, they are guilty of pushing on customers and disrupting their finances in doing so.
There are several examples of clients who were afraid or end up losing their collateral just because they could afford the monthly premium or were late on their payments. This is where the Debt Arrangement Scheme (DAS) comes in. It is a feasible option as compared to DMP, and the following reasons explain why!
DAS is a Formal Plan, which is Geared Towards the Borrower
When you sign up for a DMP, it legally binds you to the agreement, that means the Government can’t protect you. With a Debt Arrangement Scheme (DAS), you sign a legal contract, and all parties involved are bound to it, thus safekeeping your interests.
It Protects Your Home and Car
This is very important, and the authorities commend DAS for that. You may risk losing your car on your formal plan, and a DMP will take longer to pay off. A DAS definitely is an option you should consider as it protects both your home and car. This is an informal solution that hinders your creditor’s ability to take strict action against your property.
DAS Freezes the Interest
DMP is often charged interest with penalties and fees. Nothing is stopping them from not doing it. This means they can increase your costs as they want. This is not the case with DAS; If you sign for a Debt Payment Plan with a DAS, you freeze the interest, penalties, and fees for as long as you keep up with the agreement on payments.
DAS Protects you against the Creditor’s Harassment
When you sign up for a DPP, you won’t get harassed by creditors anymore. You now work with the adviser, so you won’t have to deal with creditors directly. This grants you privacy and peace of mind. The harassment and nagging of creditors are why most people are afraid of acquiring loans.
DAS has a Fixed End
DAS is more predictable and feasible. It is limited for five years for business, and ten years for personal use. The length of the program is fixed hen you sign up. Therefore, you know what you are signing up for more. DMP doesn’t have a fixed date, and it usually takes a lifetime to pay back a debt.
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