An informal arrangement with creditors is an agreement between you and your creditors to repay your debts with a reduced monthly payment.

Key characteristics

These types of arrangements are not court ordered or approved, and are suitable for people who are experiencing debt problems but are likely to be able to make the normal repayments again in the near future, normally in a few months. The informal arrangement may be an effective solution for people with short-term financial problems.

Advantages

• Creditors may agree with what you propose to repay on a temporary basis.
• Creditors can’t refuse any payments you make to them.
• You can negotiate reduced repayments yourself without having to contact a debt advice provider.
• Creditors may be prepared to write off the balance of what you owe after a period of time if you have shown that you have made every effort to pay them back as much as you can, and you have maintained regular payments to them.

Disadvantages

• Creditors don’t have to agree with what you propose.
• Creditors don’t have to freeze interest or charges.
• If you can only afford small payments, they may not be enough even to cover interest or charges, and your debts will increase.
• You remain liable to pay the full amount of your debts.
• Creditors may take debt recovery and legal action against you.
• You are responsible for keeping creditors informed of your circumstances.

How we can help

An informal arrangement with creditors is a self-made repayment plan. The idea is you should be able to negotiate with the creditors yourself. We can provide general information and advice on how this can be done.