An informal arrangement is a way of dealing with your debts, and as the title suggests, by way of an informal agreement. Having spoken with your creditors, you agree to make regular payments to them over an agreed period of time to settle the debt incurred.

An informal arrangement is one way to help you deal with your debts. Your creditors don’t have to accept your informal arrangement proposals and could cancel it at any time and therefore you should keep this in mind when approaching your creditors to ask them to agree to lower repayments.

As it is an informal arrangement, you do not need the services of an insolvency practitioner and it is you that is responsible for making all the agreed repayments and keeping your creditors up-to-date about your finances.

If your financial position should change, and either you can’t keep up with the repayment, or have the ability to add to your ongoing repayments, you can try to negotiate another arrangement.

In managing an informal arrangement, yourself, you are not likely to be taking professional advice and therefore you need to keep in mind that if your repayments are small, they may not cover any interest or charges that continue to accrue. Should this happen, the amount of debt you have to repay and the time it takes to pay it off could increase.

To ensure that an informal arrangement is the right way to deal with your debts, get free help and advice from organisations like the Citizens Advice Bureau. If you do decide to enter into a formal arrangement, then consider the following;

  • Work out a budget. This will show you how much you can afford to pay your creditors each month after you have paid essential living expenses.
  • Write out your informal arrangement showing what you can reasonably afford to repay and over what period of time.
  • Write to each of your creditors explaining your situation and asking them to accept your informal arrangement.