Debt Advice Handbook Scotland 1st ed - with new materialChapter 6: Statutory debt solutions in Scotland3. The Debt Arrangement Scheme Revocation of a DPP
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Revocation of a DPP
The DAS administrator can revoke a DPP.1Part 8 DAS(S) Regs They must revoke a DPP where a client has:
    •submitted a debtor application for bankruptcy, which has been awarded; or
    •a trust deed which has gained protected status; or
    •died.
The DAS administrator records the revocation date on the DAS Register. This stays on the register for six weeks after the revocation.
The DAS administrator notifies all parties that the DPP is revoked. All payments agreed in the DPP stop. Where a DPP was revoked because the client applied for bankruptcy, which was awarded, or granted a trust deed which has become protected, creditors can reapply any interest, fees and charges to the debt 14 days after the date of revocation. However, this debt is now to be included in the bankruptcy or protected trust deed, where applicable. The client’s details are recorded on the Register of Insolvencies, when they are bankrupt or in a protected trust deed.
Where a DPP was revoked upon the death of a client, creditors cannot take enforcement action or reapply interest, fees and charges until six weeks have elapsed from the revocation date.
 
1     Part 8 DAS(S) Regs »
Application for revocation
An application for revocation can be made by the client in writing, or the debt adviser on the client’s behalf, or by a creditor taking part in the DPP.1Reg 41 DAS(S) Regs The debt adviser should apply via eDEN. Note: there has to have been a breach of the regulations before a revocation application can go ahead.
The DPP can be revoked by the DAS administrator:2Reg 42 DAS(S) Regs
    •if a client fails without reasonable cause to satisfy a standard or discretionary condition;
    •the client has knowingly made an untrue statement in an application for approval or variation of the DPP;
    •if a payment to be paid under the DPP becomes due, and a sum totalling the equivalent of three months’ worth of payments is outstanding;
    •in the case of a joint DPP, where the parties no longer qualify to be part of a joint DPP.
If the DAS administrator proposes to revoke the DPP following the receipt of an application, they inform:
    •the client;
    •the client’s debt adviser;
    •each creditor in the programme;
    •any creditor who has made an application for variation of the DPP.
The revocation proposal gives all parties to the DPP four weeks to provide information or reasons why the DPP should not be revoked.
 
1     Reg 41 DAS(S) Regs »
2     Reg 42 DAS(S) Regs »
Determination of a revocation
Only the DAS administrator can make a determination on an application for revocation. They consider:
    •any statement made by, or on behalf of, the client;
    •the nature of any failure or untrue statement;
    •any factor that may indicate whether or not the programme will be successful;
    •any representations made by the client or creditors;
    •any other appropriate factor.
If an application for revocation is approved, the DAS administrator informs:
    •the client;
    •the client’s debt adviser;
    •the payments distributor;
    •the client’s employer, if the DPP instalments are being paid directly from the client’s wages;
    •creditors taking part in the programme.
The notice is issued by the DAS administrator and includes the reasons for the decision. All payments agreed in the DPP stop and the DAS administrator removes the client’s details from the DAS Register.
Creditors can consider whether enforcement action is required, or appropriate, to recover the debts.
The client is required to pay the debts under the terms and conditions under which the debt was originally provided. However, creditors cannot take any enforcement action until 14 days after the revocation.
Creditors can also apply interest, fees and charges to the debt after 14 days. If the client, the debt adviser or a creditor requests a review of the revocation decision, creditors must wait a further 28 days before taking enforcement action or adding interest, fees and charges.
If dissatisfied with the outcome of the review, the client or a creditor can appeal to the sheriff on a point of law against this decision.
If the DAS administrator decides to reject an application to revoke the DPP, all parties are informed of the decision. The client should continue to make the payments agreed in the DPP.
Revocation of a joint DPP
In a joint DPP, the debt adviser or either client can apply for revocation where they split up or one of them dies.1Reg 22 DAS(S) Regs See here for who can have a joint DPP.
Where the clients no longer meet these criteria for a joint DPP, the DPP can be revoked. The clients are protected from creditor enforcement for six weeks following the date of revocation. In effect, this means the AiB treats both clients as if they have made a moratorium application in their own names.
This allows both clients to seek money advice without fear of a creditor taking action against them. Only joint DPPs which are revoked as a result of the clients’ relationship breakdown get this protection. It does not apply if a joint DPP has been revoked due to a breach of the regulations.
If the DPP has been revoked due to the death of one of the clients, the revocation has no effect for six weeks. Creditors cannot apply any interest, fees or charges to the debt during this six-week period. The debt adviser should bear this in mind if the surviving client wishes to apply for a DPP in their own name. In addition to the above protections, if a joint DPP has been revoked as a result of a relationship breakdown or a death, a client has the right to apply for a moratorium, even if they have already had a moratorium within the preceding 12 months.2s195(1) B(S)A 2016
There is further protection where the client applies for a DPP in their own name within 21 days of the revocation of the joint DPP. In this case, the creditors cannot apply any interest, fees or charges to the debt.3Reg 4(4) DAS(IFP)(S) Regs
You should treat any joint and severally liable debt as if each client owes the full outstanding amount. This protects each client if their ex-partner does not pay. The creditor can apply to vary the client’s DPP if the debt is paid in full before the end of the agreed DPP period. Therefore, the client should not overpay. However, it is good practice for the client and debt adviser to monitor this situation, and apply for a variation if required and if the creditor fails to do so.
If the client applies for a new DPP more than six weeks after the previous joint DPP was revoked, interest, fees and charges may be applied to the client’s debts, subject to the discretion of the creditor. Advisers should assist the client in these circumstances by submitting an application within six weeks. The client is still protected from creditor enforcement action up to the end of the six weeks.
 
1     Reg 22 DAS(S) Regs »
2     s195(1) B(S)A 2016 »
3     Reg 4(4) DAS(IFP)(S) Regs »