Informal Agreement with Creditors
Informally negotiated agreements may involve:- Payments from your income and/or
- Payments from lump sums you receive for example from an inheritance or from relatives
Creditors may be prepared, at the start or later, to agree to write off part of what you owe them: any agreement to do so should be confirmed in writing.
Payments from income:
You need to work out how much you can afford to repay, after allowing for your essential household and personal expenditure such as mortgage/rent, heating, utilities, housekeeping etc. You should offer to share this surplus income among your creditors, based on the amounts you owe them. This means that all your creditors are offered their share of what you can afford. You also need to ask that any interest or charges are frozen. Creditors will expect you to provide them with regular updates of your income and expenditure so that they can see whether you are able to increase your payments.Payments from lump sums:
You may make payments towards your debts from a lump sum which you receive and which your creditors may agree to accept in settlement of what you owe – that is, they agree to write off the balance they are owed. If however you do have surplus income, then they may expect you also to make at least some payments from that surplus income.If your inability to make payments is temporary, as a result for example of a short term illness, creditors may agree to accept no payments or only token payments of say £1 a month, but only for a limited period
If you are not sure about the extent of your problem then try filling in our online Debt Calculator. This will help you calculate how much money you have left over each month to pay your debts (creditors)
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