Summary
Debt level: £180k | Employment: Self-employed | Approval Date: October 2025 | Status: Ongoing
Our client approached us after one of his creditors had started taking steps to make him bankrupt (called sequestration, in Scotland). Although the level of debt was significant, it was evident that he had the means to repay his creditors within a reasonable period through his income if he was given time and space to do so. As a homeowner with a young family, bankruptcy would have had serious consequences for both him and his household. A detailed review of his circumstances demonstrated that creditors would receive a considerably better return through a Debt Arrangement Scheme than through bankruptcy. On that basis, a DAS was proposed and approved. The strength of the proposal subsequently meant the client was able to avoid bankruptcy.
Challenges
- Sequestration in motion: Our client approached us with a creditor’s petition already presented. The challenge lay not only in devising a workable repayment plan, but in using it to challenge the petition itself.
- A wider impact: With a home and children to protect, the consequences of an adverse outcome were serious for our client. The solution had to safeguard the household while satisfying creditors.
- Establishing a better return than bankruptcy: To prevent bankruptcy, we had to demonstrate clearly that a DAS would provide creditors with a greater return than bankruptcy, and within a reasonable timeframe.
Outcomes
- The sequestration petition was dismissed once the court accepted that the DAS offered a better outcome for both creditors and our client.
- A repayment term was agreed that was considerably shorter than many debt arrangements – satisfying creditors.
- Our client retained control of his affairs and his family home.
Success Story
Our client had strong disposable income, and a detailed review established that his creditors would be materially better served under a Debt Arrangement Scheme than through bankruptcy. A DAS was therefore proposed and approved.
With a sustainable repayment proposal in place, the sequestration proceedings were challenged. The petition was ultimately dismissed, once it was accepted that the DAS would provide the better outcome for all parties.
This case demonstrates how a DAS can serve as an effective alternative to sequestration where a debtor has strong disposable income. It shows that homeowners can frequently achieve better outcomes through a repayment arrangement than through bankruptcy, and that the courts may recognise a DAS as the superior route where debts can be cleared within a reasonable timeframe. Significant debts do not automatically necessitate bankruptcy where repayment is demonstrably achievable, and both family stability and creditor interests can be protected through a properly structured proposal.
Benefits of a Debt Arrangement Scheme
- The sum being paid each month is calculated based on what is genuinely affordable, rather than the individual having to meet multiple contractual requirements across several unsecured debts.
- Once approved, the agreement is legally binding on all creditors, and as long as the payment plan is maintained, those creditors cannot take any further action to recover the debt.
- Any existing wage arrestments (when money is deduced from your salary by payroll to pay to a creditor) are removed once the DAS is approved.
- The plan doesn’t take into account your assets (unlike insolvency when those may need to be sold), so it’s a great way to protect your assets, so long as a structured repayment plan is put in place.
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