Notes for Guidance - Creditors - Debt Arrangement Scheme

The date of approval will take effect from midnight of the day immediately preceding the day the notice appears in the register (i.e. a DPP approved on 1 November 2018 will be approved from midnight on 31 October 2018).

All interest, fees, penalties, or other charges remain frozen until the DPP is completed or revoked.

The protection from enforcement which started when the DPP application was received by the DAS Administrator will continue. As a creditor, you may not:

• serve a charge for payment
• commence or execute any diligence to enforce any debt owed by the client
• petition for the client’s sequestration

From the date the DPP is approved, you must:

• stop any planned enforcement actions
• stop any correspondence with the client asking for payment of the debt whilst the DPP is on-going
• not attempt to persuade the client to withdraw from the DPP or to make additional payments to a debt included in the DPP
• freeze all interest, fees and charges on the debts in the DPP from the date the application was submitted
• upon request provide necessary information to assist the management of the DPP

The client will be subject to the standard conditions. These include:

• to make the first payment within 42 days of the DPP being approved
• make all payments as they fall due
• pay a continuing liability, e.g. council tax

A full list of the standard conditions can be found at Regulation 27.

The client may also be subject to discretionary conditions which are put forward on their behalf by the money adviser or imposed by the DAS Administrator to allow the DPP to be approved.

These could include:

• money paid from the sale of an asset
• a guarantee of extra payments from a future lump sum
• any other reasonable condition

If the client fails to meet the terms of a discretionary condition within the timescale the DPP may be revoked.

If the client has a conjoined arrestment order, time to pay direction, time to pay order or time order the DAS Administrator or a continuing money adviser will notify the clerk of court. This will in effect recall the order.

Therefore, if you are receiving any monies because of a direction or order, these payments will stop as the debt should be being paid through the DPP. If a debt has been omitted from the DPP, then it may be possible to include it through a variation to the DPP.

You must not try to persuade a client to withdraw from a DPP or make additional payments in respect of a debt included in the DPP. 

If you have an administration system which electronically generates reminder letters or demands for payment, you should stop issuing these letters immediately. Failure to do so may result in the DAS Administrator contacting Financial Conduct Authority under their Treating Customers Fairly policy.

You must on request by a continuing money adviser to the client, or the DAS Administrator, provide a statement of all the client’s liabilities. You must also notify any continuing money adviser or the DAS Administrator of any liability where you have security against a co-obligant of the client.

Protection from diligence will continue for 14 days from the date the DAS Administrator enters the notice of rejection of the DPP on the DAS register. 

The client has the right to request a review within 14 days of the date they are notified of the rejection, and the DAS Administrator must carry out the review within 28 days of the date the application for review is received. The client will be protected from enforcement action during this further 28 day period. 

At the end of the review period, you will be able to consider whether further enforcement action to recover debts is appropriate. You may also apply interest, fees, and charges on the debt as per your terms and conditions.

The DAS register will be amended to show 'application has been rejected under the fair and reasonable test under Regulation 25'.

Under Regulation 20(4) in the period between an application for a DPP being received and the DPP being approved or rejected, the client may inform the DAS Administrator in writing that they wish to withdraw their application.

Protection from diligence will cease from the date the DAS Administrator enters the withdrawal of the application on the DAS register.

The DAS register will be amended to show 'withdrawal of application under Regulation 20(4)'.

You must not offer further credit to the client whilst they have a DPP. The only exceptions are:

• credit approved by a variation of a DPP
• credit up to a maximum of £2,000, with certain restrictions
• further credit given as part of a cyclical loan agreement which was already in operation when the DPP was approved. In this case, the payment by the client must not vary because this credit has been given
• trade credit incurred by the client in the ordinary course of business. If the client applies for this credit, they must give you written notification of their DPP
• credit for emergency repairs as specified in the regulations at regulation 33(6). If the client applies for this credit, they must give you written notification of their DPP
• credit for reasonable funeral expenses for an immediate family member. If the client applies for this credit, they must give you written notification of their DPP

If you do give credit to a client with a DPP for reasons other than that allowed by regulation 33, you will not be able to take action to recover this debt -  serve a charge for payment, commence any diligence to enforce payment or petition for the sequestration of the estate  - until after the DPP is completed or revoked.

Clients in a DPP are not permitted, under the standard conditions, to apply for or obtain credit other in the circumstances set out above. Therefore, if you provide credit to a client who did not inform you that they are currently in a DPP, this may be grounds for the DPP to be revoked. If you believe this is the case you should contact the DAS Administrator.

Where a DPP is approved and the client has previously granted a trust deed which was not protected, the trust deed in effect ceases to exist. Therefore, it is unlikely that you will receive a dividend from that trust deed agreement.