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Debt Arrangement Scheme - Missed Payments Update

18th January 2021

Photograph of Debt Arrangement Scheme - Missed Payments Update

From the Accountant in Bankruptcy - Scotland's Insolvency Service.

In recognition of the extraordinary circumstances caused by the COVID-19 starting in March 2020, The Debt Arrangment Scheme (DAS) Administrator has published updated guidance for DAS clients and money advisers. Within these changes, was an assurance we would not revoke any DAS debt payment programmes due to missed payments resulting from pandemic.

Things are still relatively uncertain with many people still unsure of their long-term prospects. The DAS Administrator has worked with advisers since lockdown to simplify processes and minimise any stress as far as we could. Almost 12 months have now passed. The Job Retention Scheme is under constant review, employers have been revising employment contracts or unfortunately making people redundant. As a result, we are finding more and more people are contacting their money advisers or AiB for help with what to do next.

From 18 January 2021 the DAS Administrator will start an exercise to write to every DAS client who has missed more than 3 payments, asking that they make contact with their money adviser as a matter of urgency to establish if DAS is still the correct debt solution or to see if there are any changes which could be made to the DPP to make it sustainable.

At the beginning of April 2021 the DAS Administrator will review the position in the hope that all DAS clients have made contact with their advisers and had a review.

Updated Covid-19 guidance for DAS clients - See blow

Updated Covid-19 guidance for DAS advisers - See Below

Information on all other measure AiB have put in place can be found in the Covid-19 business continuity section of our website.

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Debt Arrangement Scheme

Information for DAS Clients

Coronavirus emergency processes

DAS Missed Payments

Updated January 2021

Background

In recognition of the extraordinary circumstances and to address the immediate state of confusion and anxiety caused by the COVID-19 lockdown, in March 2020, the DAS administrator published updated guidance for DAS clients and money advisers.

This included an exceptional assurance that we would not revoke any DAS debt payment programme due to missed payments that resulted from the COVID-19 pandemic. The communication published in March 2020 advised this was a temporary measure in response to the extraordinary situation we found ourselves in.

Review of circumstances

Things are still relatively uncertain with many people still unsure of their long-term prospects. The DAS Administrator has worked with advisers since lockdown to simplify processes and minimise any stress as far as we could.

Almost 12 months have now passed. The Job Retention Scheme (furlough) has been extended and is under constant review, employers have been contacting people with revised employment contracts or unfortunately making people redundant, so we are finding more people are contacting their money advisers or AiB for help with what to do next.



What happens now?

From 18 January 2021 the DAS Administrator will start an exercise to write to every DAS client who has missed more than 3 payments, asking that they make contact with their money adviser as a matter of urgency. This is to allow money advisers to work with DAS clients to establish if DAS is still the correct debt solution or to see if there are any changes which could be made to the DAS DPP to make it sustainable.

We will be starting the exercise by contacting those who have missed the most payments.

At the beginning of April 2021 the DAS Administrator will review the position in the hope that all DAS clients have made contact with their advisers and had a review.

If you receive this letter, please contact your money adviser urgently.

If you receive the letter and are already discussing your situation with your adviser, you do not need to do anything.

What if you aren't missing payments but are struggling to keep up with payments?

If you are unable to maintain payments, the first step is to speak to your money adviser. Please note that although the DAS Administrator can provide general DAS information, we are unable to provide specific debt advice to individuals because we lack the relevant regulatory authorisations, which are held by money advisers.

Payments Distributors (the organisation to whom you make your DAS payments) are also unable to give you advice. Their role is specifically to deal with payments.

Your money adviser will be able to assess your circumstances in case there are changes you can make to your DAS Debt Payment Programme (such as reducing your instalment amount) which may allow your DAS to remain sustainable.

Submitting Enquiries

AiB has contingency plans in place at present and our staff are able to access our systems remotely to ensure we continue to deliver our service. Due to our remote working arrangements we have limited capacity to deal with telephone enquiries.

DAS clients who have registered to use the DAS eDEN case management system can contact us via eDEN, or by email here: mailto:das@aib.gov.uk.

AiB continues to review processes regularly and are working to make sure we are supporting our stakeholders in any way we can. Any changes will be communicated via the AiB website and on our respective case management systems.



Dr Richard Dennis

Agency Chief Executive, Accountant in Bankruptcy

DAS Administrator

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Debt Arrangement Scheme

Information for Money Advisers

Coronavirus emergency processes

DAS Missed payments

Updated January 2021

Background

In recognition of the extraordinary circumstances and to address the immediate state of confusion and anxiety caused by the COVID-19 lockdown, in March 2020, the DAS administrator published updated guidance for DAS clients and money advisers.

This included an exceptional assurance that we would not revoke any DAS debt payment programme due to missed payments that resulted from the COVID-19 pandemic.

We also eased our evidence requirements as clients reported difficulty in making contact with advisers, and advisers needed support establishing new ways of working to deliver their essential services.

The communication published in March 2020 advised these were temporary measures in response to the extraordinary situation we found ourselves in.

Review of circumstances

Things are still relatively uncertain with many people still unsure of their long-term prospects. It has been encouraging to see positive collaborative working between the DAS Administrator and advisers during the last 10 months to simplify processes and minimise stress as much as we could.

Almost a year has passed. The Job Retention Scheme (furlough) has been extended and is under constant review, employers have been contacting people with revised employment contracts or unfortunately making people redundant, so we are finding more people are contacting us directly for help with what to do next. Our Payments Distributors (PDs) are also reporting an increase in enquiries from DAS clients for advice on what to do.



DAS Missed Payment letter

We intended to commence action on the DAS cases with missed payments in 2 November 2020. However, rules around the furlough scheme changed and we agreed to review again in the New Year. We have listened to advisers who have asked that this matter be addressed sooner rather than later.

With that in mind, the DAS Administrator will be writing to every DAS client who has missed more than 3 payments asking that they make contact with their money adviser as a matter of urgency.

We will start this process from next week, 18 January, and will be starting with those who have missed the highest number of payments.



There are almost 1,400 clients who have missed more than 3 payments.

40 clients have missed over 12 months, and they will be contacted first.

Around 140 have missed 10 and 11 months, and they will be in the second batch of letters to be issued incrementally.

Letters will be issued in batches to avoid any potential deluge of enquiries. This will hopefully allow money advisers to work with DAS clients to establish if DAS is still the correct debt solution or to see if there are any changes which could be made to the DPP to make it sustainable.

I understand many money advisers have already been undertaking reviews with their clients as part of the ongoing support provided.

At the beginning of April 2021 the DAS Administrator will review the position in the hope that all DAS clients have made contact with their advisers and had a review.

A copy of the letter is attached for your information.



What happens when a client makes contact when they get the letter?

Normal processes should apply when a client contacts you for advice or to report a change in circumstances. Unfortunately, for many people, DAS may no longer be a sustainable option.

One recurring question in recent weeks is

"...how do I get the DAS revoked for the client to apply for bankruptcy?.."

It is perhaps worth remembering that being in a live DAS DPP does not preclude a debtor application being made for bankruptcy. If bankruptcy is the best option for a client in a live DPP, the application should be made.

In the event of a bankruptcy being approved, the DPP will be automatically revoked.

The letter also explains to the client what they may be required to have ready before any review appointment which should hopefully expedite processes for money advisers..

What happens if a client gets the letter and the case is already being reviewed?

The adviser use of eDEN notes is very important here. The issuing of the letters is automatic and is based on an eDEN report of missed payments. It is possible that many clients will already be in the process of applying for a variation, or may indeed already be in the revocation process.

If the client receives a letter and they are already working with the adviser, this must be noted in the Notes field of eDEN and the DAS Admin decision maker will take it into account for any subsequent decision being made.

Evidence requirement

Acknowledging the immediate impact lockdown had on advisers and clients, the DAS Administrator changed processes for variation applications.

This was in part due to clients reporting difficulty making contact with advisers, and the immediate state of flux with people unable to obtain letters from employers or payslips by way of evidencing the changes.

As a result we introduced streamlined guidance for clients to apply for variations for payment breaks or to reduce their DPP instalments.

This has had mixed results. For example, despite it being made clear in our letters and guidance, some clients have made representation to their advisers that they hadn't anticipated the DPP would be extended by the corresponding payment break period.

Where a client submitted their own variation application, we accepted the client's statement that their income had dropped sufficiently to approve the variation.

Now, we will be reverting to processes pre-lockdown for the evidence requirement for variations.

Money Adviser submitted variation:

Where the adviser has reviewed the client’s circumstances and believes a variation for a payment break or change of contribution is needed, the adviser must state in the ‘Supporting Information’ section of eDEN that they have seen proof the debtor has had a [50% decrease in disposable income for a payment break or specified amount for a change in payment amount] change in income.

If they can, the adviser should upload the evidence to eDEN. If they cannot, a note of the adviser’s word is sufficient for our purposes. The client should be reminded it is important for them to retain a copy of the evidence they shared with you.

Client submitted variation:

If the client is submitting their own variation application to amend the payment amount or apply for a payment break, evidence will be required.

The Fair and Reasonable process

We know many clients are still in a position of uncertainty.

Another recent question from advisers is

"...can I still submit a payment break application if a client has been missing payments due to COVID-19?.."

This is a question of sustainability and forms part of the review process the adviser needs to have with the client. Remember, if a client has missed 6-months of payments and then requests a 6-month payment break, this will extend the duration of the DPP by another year.

Additionally, as with most variation applications, creditors will be asked to consent. The DAS Administrator will continue to take a pragmatic approach to the Fair and Reasonable process, but here, the role of the money adviser and use of the Notes facility on eDEN is very important.

There are obvious benefits in providing as much information as possible at the outset, particularly with variations as creditors are furnished with full details to allow them to make an informed decision. This may be the difference in their accepting or rejecting a proposal, thus expediting the process by increasing the chance of the proposal being automatically approved.

Where creditors object to variation applications, we often go back to advisers for comment or further information. To expedite the process and minimise the back and forth for the adviser and client, it is important to furnish the DAS Administrator with as much information as possible.

Submitting Enquiries

AiB has contingency plans in place at present and our staff are able to access our systems remotely to ensure we continue to deliver our service. Due to our remote working arrangements we are still unable to respond to telephone enquiries. Case specific queries should be made via eDEN conversations, and general queries directed to our email inbox here: mailto:das@aib.gov.uk.

AiB continues to review processes regularly and are working to make sure we are supporting our stakeholders in any way we can. Any changes will be communicated via the AiB website and on our respective case management systems.

Kelly Donohoe

Head of DAS and Trust Deeds

Accountant in Bankruptcy web site - www.aib.gov.uk/