Similar to Debt Management Plans, informal agreements involve direct contact with the creditors and an agreement with the creditors as to the repayment amount. Debts have to be paid in full and the arrangements are not legally binding.
As an informal agreement is similar to a debt management plan, this means contacting your creditors directly and negotiating a monthly payment with them.
You will probably need to prepare a list of assets and liabilities, income and expenditure beforehand.
Creditors may not agree to your offer and may require more money each month.
Under an informal arrangement you will pay your debts in full so a longer time period may be necessary. You can ask your creditors to suspend interest and charges, although your creditors do not have to agree to this. An informal arrangement is not legally binding so creditors can still pursue you despite the plan being in place.
Informal arrangements can only be used to pay ‘unsecured’ debts so any mortgage arrears, court fines, Student Loans and debts due to HMRC (including tax credit overpayments) have to be paid outside of the arrangement.
Your creditors can cancel the arrangement if you don’t keep up your repayments.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you. We're here to help on 0800 019 8383.