Notes for Guidance - Creditors - Debt Arrangement Scheme

You can apply for a variation to a DPP to the DAS Administrator on a Form 4 (application for a variation of a debt payment programme). 

If you are applying for a variation, you must first have attempted to agree the variation with the client. 

The DAS Administrator will not consider your application unless you have made a reasonable attempt to do so.

Incorrect debt balance

If you are applying to address an incorrect debt balance, you must do so within 120 days of the DPP being approved.

In exceptional circumstances the DAS Administrator will accept variations to amend debt balances after 120 days, but only where good cause has been shown by the creditor to explain why the application could not have been made earlier.

Situations can occur when there is a sudden emergency and the client is not able to make the regular payment to their DPP. There is no list which sets out what an emergency is but could include the breakdown of a car or household item.

In this situation the money adviser can assess if this is a one off emergency or if they require to do a full assessment of the client’s circumstances and apply for a payment break.

If they are satisfied it is appropriate the money adviser can approve a short term crisis break immediately which allows the client to miss one payment, but they must be able to make the next payment when it is due. 

The DPP will extend by one month to cover the missed payment.

It is important to note creditors will not be consulted in advance or asked to consent. All parties will be notified of the decision to approve it after the decision has been made.

The client is only permitted to miss the equivalent of two months’ worth of payments through a short term crisis break in a rolling year.

Details of the crisis is shared with the DAS Administrator and creditors in the decision notification, and the DPP is extended by the corresponding period.

DPPs can sometimes become unmanageable due to a short term income shock where an individual, or someone in their household, experiences a reduction in their disposable income.

In these circumstances, a client can apply for up to a six month payment break only if their disposable income has reduced by 50% and it is considered the reduction will last for the period of the break.

The payment break variation interrupts the term of the DPP, therefore the DPP will be extended by the equivalent period at the end.

If a payment break variation is approved your payments will stop for the stated period, the maximum being six months. You should not contact the client or issue demand letters to the client during this period.

After, the payment break variation has finished, the client should recommence payments as agreed in their DPP. During this time the client may reconsider their debt management options with a money adviser.

There is no limit to the number of times a client can apply for a payment break variation during the period of their DPP, provided they meet the necessary criteria.

Before approving the variation, the DAS Administrator will consider whether the client has had a previous payment break variation.

The DAS Administrator must agree to a variation in the following circumstances:

• where a client agrees with all the creditors that the DPP should be varied
• where a client and a creditor agree the client no longer needs to pay the creditor what is owed
• where the effect of the variation will be to reduce the term of the DPP

Fair and reasonable test

The DAS Administrator may approve a variation subject to the fair and reasonable criteria in the following circumstances:

• where there has been a material change of circumstances which may include an increase or decrease in the client’s income
• when a debt due at the approval of the programme was omitted from the DPP or wrongly assessed for the DPP because it was overlooked, or someone made an error or for some other reasonable cause
• where a future debt, which was not quantifiable when the DPP was approved, becomes due for payment. For example, if the client has a debt which they do not have to start paying for some months
• where a contingent debt, which was not quantifiable when the DPP was approved, becomes due for payment. For example, if the client has been a guarantor for someone else’s debt and the creditor has called up the guarantee
• if the client has an emergency and needs credit to meet an essential requirement

You will receive a variation notice through eDEN (or letter) if the client, another creditor, or a money adviser acting on behalf of the client has applied to the DAS Administrator to vary the DPP.

You can provide the DAS Administrator with your views on whether this application should be varied or not, including any reasons.

You must respond to the variation application within 21 days of being notified. If you do not respond you will be deemed to have accepted the proposal.

When the DAS Administrator is determining whether a variation is fair and reasonable, they will take into consideration:

• the fair and reasonable criteria shown in Regulation 25
• the views of the client
• the views of the other client in the case of a joint DPP
• the views of a creditor taking part in the programme and of any creditor making the application
• the views of any money adviser who has provided advice to the client
• whether any expenditure of the client declared in assessing disposable income appears to be necessarily incurred by the client
• any payment break variation previously approved
• may have regard to any other factor the DAS Administrator considers appropriate